Bangladesh among most exposed to war fallout: ICCB

Bangladesh is among the economies most exposed to the fallout from the ongoing military conflict in the Middle East, with rising energy, fertiliser, and freight costs threatening to drive up domestic inflation, the International Chamber of Commerce-Bangladesh (ICCB) said.

In the editorial of its quarterly news bulletin published yesterday, the business chamber described the Middle East conflict involving the United States, Israel, and Iran as “the worst global crisis since the pandemic.”

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The chamber warned that escalating operational expenses threaten to hit core export industries -- most notably readymade garments -- while straining fiscal reserves through higher energy subsidies.

Consequently, the crisis undermines national macroeconomic stability and risks stalling Bangladesh’s planned graduation from the least developed country (LDC) category.

International financial institutions have already warned that prolonged hostilities could significantly weaken global economic growth while fuelling inflation.

For many developing countries, particularly those heavily dependent on imported energy and food, the conflict risks widening fiscal deficits, increasing debt burdens and slowing progress towards the sustainable development goals.

As a net importer of fuel, fertiliser and other essentials, Bangladesh faces rising global energy, shipping and insurance costs and supply-chain disruptions, which could increase inflation, widen the trade deficit, raise the government’s subsidy burden and increase production costs, especially for the readymade garment sector.

Rising fertiliser prices could also affect domestic agricultural productivity and food prices, while prolonged geopolitical uncertainty threatens to discourage foreign direct investment.

Beyond immediate domestic impacts, the ICCB noted that the crisis highlights the need for a more resilient global trading system.

While businesses are increasingly diversifying supply chains, strengthening inventory management, and investing in digital trade solutions, the chamber stressed that such adjustments require time, investment, and greater international cooperation.

“At this critical juncture, the international community must prioritise diplomacy over confrontation,” the chamber stated, adding that sustainable peace is an economic imperative to preserve open trade routes and ensure uninterrupted access to food and energy.

Citing a joint report by the International Chamber of Commerce (ICC) and Oxford Economics, the chamber noted that economic policy uncertainty in 2025 reduced real business investment by 1.4 per cent across 10 major economies, representing about $202 billion in lost or delayed capital spending.

In an adverse 2026 scenario, those costs could rise to $380 billion, whereas a return to policy clarity could generate an additional $252 billion in investment -- representing a swing of more than $630 billion.

The ICC said the conflict shows that geopolitical tensions have global economic consequences, affecting countries, businesses and consumers.

Disruptions to energy infrastructure and shipping in the Strait of Hormuz have pushed up oil, gas, fertiliser and freight costs, fuelling inflation and threatening food security. Heightened uncertainty is also raising input costs and making investors more cautious.

The ICC stressed that peace and stability are essential for investment, efficient supply chains and sustainable economic growth.