Middle East war and global economic fragility

The ongoing war between Iran, America and Israel has raised serious apprehension of economic vulnerability in the world. Violence triggered across the Middle East has become a cause for serious concern for South Asian countries like Bangladesh and others.

Since most of our exports are UK-based and the Strait of Hormuz is widely used for trading, any restriction on this channel will increase transportation costs, and market competitiveness may be lost. Besides, the prices of petroleum and gas will surge due to the war, which will cause disruption in international trade and also create inflation within countries.

The conflicts are now causing huge war expenditures for the participating countries. Moreover, Bangladesh's manpower is highly dependent on Middle Eastern countries for foreign remittances, which have strong link with our foreign exchange reserves as well as the daily livelihood of middle-class and lower-middle-class families.

The world has already been facing the trauma of the Ukraine-Russia war for the last four years. In this situation, the current war will be a great macroeconomic burden. Though the bilateral trade between Bangladesh and Iran is not very large, the effects are highly interconnected, linking fuel prices, foreign remittances and export routes.

If the world's major powers do not take immediate steps to initiate negotiation instead of waging war, the situation may lead to a massive humanitarian catastrophe in the future.

Kawaik Azad Pronoy

A Banker