A mid-June assessment by the World Bank, conducted as part of a proposed budget support project for the government, warns that a prolonged conflict could put nearly 600,000 jobs at risk. The economic shock also threatens to derail poverty alleviation efforts. Without the conflict, approximately 1.7 million Bangladeshis were projected to lift themselves out of poverty in 2026. That figure could now shrink to just 500,000, leaving an estimated 1.2 million people trapped below the poverty line.

This crisis hits Bangladesh at an exceptionally vulnerable time. The nation is already grappling with persistent high inflation, a fragile banking sector, and constrained fiscal reserves. According to World Bank estimates, the domestic impoverished population expanded by roughly 1.4 million in 2025 alone. Price hikes are expected to account for nearly 10 per cent of the rise in poverty this year. Passing increased fuel costs on to consumers could push overall inflation up by more than 0.5 percentage points, placing an onerous burden on low-income households.

Bangladesh’s heavy dependence on imported energy lies at the heart of its vulnerability. Natural gas accounts for over half of the country’s primary energy supply, yet domestic production has dropped by 15 per cent compared to its 2016 peak. Middle Eastern suppliers account for 60 to 65 per cent of crude oil imports and 55 to 60 per cent of liquefied natural gas (LNG) shipments. Following recent geopolitical disruptions involving the United States, Israel, and Iran, state-owned Petrobangla saw five of its six long-term LNG supply contracts declared under ‘force majeure’. Concurrently, spot-market LNG prices surged past $24 to $28 per million British thermal units (MMBtu)—more than double previous rates.

The surge in energy prices threatens to strain public finances severely. World Bank projections suggest that government energy subsidies could reach 2.8 per cent of GDP in the 2025–26 fiscal year, raising the total subsidy burden to between $2.5 billion and $4.8 billion. Such fiscal pressure risks diverting funds away from essential social safety nets and public services.

The ramifications extend far into the agricultural sector, which sustains nearly 40 per cent of the population. Bangladesh relies heavily on intensive fertiliser use, averaging 391.9 kilograms per hectare—more than double the global average. Severe gas shortages have already forced five of the country’s six state-owned urea fertiliser plants to halt operations. Retail urea prices have jumped by 30 per cent, with the World Bank warning that prices could double if supply disruptions persist.

Healthcare and pharmaceutical operations are similarly feeling the strain. Rising electricity tariffs and generator fuel costs are driving up expenses across 19,000 public health centres and 6,200 private hospitals. Monthly electricity bills for the country’s 64 largest public hospitals range between $600,000 and $1.1 million. Furthermore, freight costs are inflating the price of imported raw materials for roughly 250 domestic pharmaceutical manufacturers, as well as essential medical equipment, 90 per cent of which is sourced abroad.

Addressing these warnings, Professor Mustafizur Rahman, Distinguished Fellow at the Centre for Policy Dialogue (CPD), noted that the real-world signs are already visible, pointing to halted industrial gas connections, reduced factory working hours, and recent facility closures. Responding to the situation, Finance and Planning Minister Amir Khosru Mahmud Chowdhury stated that inherited structural problems cannot be solved overnight, noting that inflation had dropped below 9 per cent in July and would have fallen further had Middle Eastern hostilities not intervened. The government continues to explore avenues to expand domestic LNG processing capacity while navigating these global headwinds.