How fallout of the Ukraine–Russia war rippled through Bangladesh’s economy
The war in Eastern Europe might be thousands of kilometres away. Nevertheless, Bangladesh too has suffered its consequences
Russian tanks crossed into Ukraine on 24 February 2022, but the shockwaves travelled far beyond Europe's eastern frontier. In Bangladesh, the war first appeared as an abstract geopolitical crisis.
Months later, its effects began to spread into kitchens, factories, power plants, and even remittance-dependent households. What began as distant news soon became an economic reality.
The earliest impact hit the nation's food and energy systems. Russia and Ukraine together have a vital position in the global wheat supply, and as the conflict unfolded, shipments tightened.
Bangladesh is a regular importer and depends highly on Russian wheat. In FY24 Bangladesh imported 500,000 tonnes of wheat from Russia and 400,000 tonnes in FY25, and with another 150,000–200,000 tonnes in the pipeline.
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But in 2022, when the war began, Bangladesh was suddenly forced to seek alternative markets. The resulting price volatility seeped into households, changing consumption patterns; researchers observed a decline in non-vegetarian food intake, driven by rising costs.
Global LNG prices, which stood at $7 in March 2021, skyrocketed to $54 in 2022. Bangladesh halted spot-market imports after paying up to $35 per unit, triggering electricity shortages and limiting industrial production.
Export-oriented industries, other industries, all were affected due to the war. Export orders dropped significantly. Energy prices went up, and we faced the dollar crisis.
Large industries that grew 15.68% in FY22 were projected to grow only 8.46% the following year. Entrepreneurs warned that the sector was now "in great danger", a sentiment that impacted the broader economy.
Export-oriented industries, particularly ready-made garments, struggled as orders dropped and raw material costs surged. Bangladesh exports Tk650 million worth of garments to Russia, but sanctions, including the removal of Russian banks from SWIFT, have complicated payments and delayed shipments already prepared for delivery.
"Export-oriented industries, other industries, all were affected due to the war. Export orders dropped significantly. Energy prices went up, and we faced the dollar crisis," said Mohammad Hatem, executive president of BKMEA. As the owner of MB Knit Fashion, he added, "My net loss was Tk30 crore due to the Russia–Ukraine war."
The financial strain accumulated quickly. Bangladesh Bank's calculation placed reserves at $29.97 billion, while the IMF's method showed $23.57 billion. By early 2024, reserves hovered between $19.94 billion and $20.19 billion, dipping to $19.99 billion after Asian Clearing Union payments.
A financial account deficit of $7.3 billion and a trade deficit of $13.39 billion (in July–January of the previous financial year) revealed vulnerabilities that the war only deepened.
Energy imports also grew costlier.
"We had to pay more for energy due to the war. Today's foreign currency crisis is also a result of the war," said Humayun Rashid, former president of IBFB. Food grain supplies, he added, suffered disruptions too, though domestic production helped cushion the impact.
Wage-earning opportunities in Russia also slowed, "If there had been no war, our economy could be in a better position. Our exports would have gone up… New markets could have been created."
Amid inflation, rising debt risks, and the aftershocks of global uncertainty, the World Bank projects only 1.7% global growth in 2025. Bangladesh sought a $4.5 billion IMF loan package.
The country has also struggled to secure the resources needed for the SDGs, managing only 3% of the required funds. Analysts warn that Goal 16, peace, justice, and strong institutions, is now at risk.
Beyond the economy, the war affected Bangladeshi families in unexpected ways. Young men lured by promises of unusually high salaries were recruited into the Russian military; many never returned. Their deaths left families devastated and financially stranded, a painful blow in a country where migrant workers often hold households together.
Two years on, the Ukraine–Russia war remains geographically distant but economically intimate for Bangladesh.
