World Bank Warns of Job Losses and Rising Poverty in Bangladesh Amid Middle East Conflict

According to a World Bank assessment attached to a proposed Contingent Emergency Response Project, Bangladesh faces a sharp rise in poverty and the loss of nearly six lakh jobs as the Middle East conflict transmits through energy markets, inflation, and a constrained fiscal envelope. The mid-June review frames Bangladesh as entering the shock with limited buffers after years of weak job creation and elevated inflation, leaving little room to absorb another major external disturbance.

The report projects the number of people expected to escape poverty this year will fall to around five lakh, down from an earlier projection of seventeen lakh. The poor population grew by an estimated fourteen lakh in 2025 alone, and rising prices are projected to account for roughly ten percent of the increase in poverty this year. Partial pass-through of higher energy prices to consumers could lift inflation by more than half a percentage point, with second-round effects on food and non-food prices hitting the poorest households hardest and widening the poverty gap.

Energy channel and fiscal arithmetic

Bangladesh's structural exposure is concentrated in liquefied natural gas. Gas supplies more than half of primary energy, while domestic production has declined about fifteen percent from its 2016 peak. The country sources sixty to sixty-five percent of its crude oil and fifty-five to sixty percent of its LNG from the Middle East. Five of Petrobangla's six LNG supply contracts have been declared force majeure, and spot LNG prices have risen to twenty-four to twenty-eight dollars per MMBtu, more than double the previous level. Dhaka last week agreed to pay above twenty-four dollars per MMBtu for two September cargoes.

Energy subsidy outlays are projected to climb to 2.8 percent of GDP in FY26, with the total subsidy burden reaching 2.5 to 4.8 billion dollars against 1.5 to 2.5 billion dollars in recent years. The World Bank flags this trajectory as a crowding-out risk for emergency and social spending. Finance and Planning Minister Amir Khosru Mahmud Chowdhury acknowledged the constraint in remarks to The Daily Star, noting that the inherited structural problems cannot be resolved overnight.

Pressure points worth tracking

The critical transmission runs through household welfare. Smallholder farmers, roughly forty percent of the population, sit at the intersection of disrupted input supply chains and broader food-price pass-through, leaving them acutely exposed to welfare shocks. Domestic fertiliser production and industrial activity are also flagged as affected, compounding pressure on an economy already weakened by a stressed banking sector and shrinking fiscal space.

Inflation did ease below nine percent in July, and officials argue the trajectory would have been steeper absent the Middle East escalation. Whether disinflation resumes, and whether the budget can absorb subsidy costs without compressing development outlays, will determine whether the projected poverty reversal and job losses materialise as forecast.