Hasina says Bangladesh preparing to tackle a possibly longer Middle-East crisis

She briefs MPs on the measures to mitigate the possible adverse impact on the economy

Houthi military helicopter flies over the Galaxy Leader cargo ship in the Red Sea in this photo released November 20, 2023. Houthi Military Media/Handout via REUTERS

The ongoing Israel-Hamas war in Palestine may affect Bangladesh’s economy if the crisis in the Middle-East deepens and prolongs further, Sheikh Hasina has warned.

The prime minister on Wednesday also briefed parliament on the measures taken by the government to mitigate the possible adverse impact of the war on the economy.

Inflation is likely to increase slightly because of the instability in the world market, inconsistencies in market management and the increase in global fuel prices, she said.

In addition, if the supply-chain of goods is disrupted because of the conflict, transportation costs for exports mainly through Iran or the region next to it may increase.

“Exporters may face tougher competition because of the increased manufacturing and supply costs,” Hasina said.

She said all the ministries and departments have been instructed to keep an eye on the ongoing events in the Middle East.

“I’ve given instructions to take necessary preparations, taking into consideration which sectors may be affected if the conflict continues."

To mitigate the impact of fuel oil price rise on shipping cost for imports, Bangladesh will strengthen ties with alternative sources like China, Morocco, Tunisia, Canada, Russia and other countries, Hasina said.

In response to a supplementary question, Hasina said the Trading Corporation of Bangladesh has sufficient manpower to continue its work on controlling commodity prices.

“We always try to keep prices down. For that, we have taken steps to increase domestic production. We are also importing products. No matter how much money is needed, we’re spending. Our reserves are under pressure, but people’s welfare comes first,” she said.

Inflationary pressure caused by imports increased because of a rise in the prices of fuel oil, cooking oil, wheat, fertilisers and raw materials, Hasina said.

“A renewed conflict in the Middle East threatens to intensify this crisis. Even in this situation, we’re trying to control inflation by mitigating the conflict’s impact on people’s lives.”

She noted that the Bangladesh Bank was launching the crawling peg system to determine exchange rates for stability. “It’ll also help control inflation.”