Six days in: How I am reading the tea leaves of war and implications for our economy

We are six days into the US-Israel strikes on Iran and I want to share how I am thinking about the trajectory of this conflict, because the way it unfolds from here has direct consequences for Bangladesh's economy.

On the war itself, I do not believe this ends in four weeks despite what Washington's optimists are saying.

Iran's missile rate is declining, which analysts attribute to precision munitions depletion, but the IRGC has institutional survival instincts built over four decades and the leadership structure, though badly damaged, has not collapsed.

A Kurdish ground offensive has opened in northwest Iran and Iraqi Kurdish forces are reportedly on standby, which is significant, but regime fragmentation takes time even under sustained air campaign pressure.

My base case is an eight-to-twelve-week air campaign before any ceasefire architecture becomes viable, with Oman the most likely mediator when that moment arrives.

A ground invasion remains a dangerous wildcard that I would not dismiss entirely given political incentives of aggressors.

On energy, Brent touched $87 intraday last Tuesday and has settled into an $81-85 band. I do not expect a return to the pre-war $65 baseline.

The Strait of Hormuz has virtually no outbound tanker traffic, Qatar Energy has declared force majeure on LNG production, the Fujairah bypass terminal has been struck, and China has now ordered its top refiners including Sinopec and PetroChina to immediately suspend diesel and gasoline exports because Beijing is clearly planning for a prolonged disruption.

The structural floor for Brent in 2026 is $80-90, and that repricing is permanent in any timeframe that matters for policy planning.

For Bangladesh, the two transmission channels that concern me most are the import bill and remittances. Our annual oil import bill was already $6-7 billion and a sustained $20-25 per barrel increase adds $2-3 billion annually to that figure.

More worrying is what happens to the 3.5 million Bangladeshis working across Saudi Arabia, UAE, Qatar, Kuwait and Bahrain, who collectively remit approximately $10-11 billion annually.

Gulf construction slowdowns and project cancellations typically produce a lagged worker return six to twelve months after the initial shock, and I would estimate a 10-15% remittance decline by Q3-Q4 2026, representing $1.0-1.5 billion in lost inflows.

Combined with exchange rate pressure pushing the kerb rate toward 128-135 by Q2/Q3, and inflation staying sticky in the 9-11% range rather than the 7-8% trajectory we were hoping for, 2026 is shaping up to be considerably harder.

What can the government do?

Five recommendations, and I want to be specific rather than vague because the situation demands it.

1. The first and most urgent is to protect the IMF relationship with full institutional seriousness. The programme Bangladesh secured is not just about the disbursement tranches themselves, it is about the credibility signal it sends to every foreign creditor, rating agency and portfolio investor watching our macro management from the outside. A delayed IMF tranche in this environment would cascade into reserves pressure, exchange rate stress and a confidence shock.

2. The second recommendation is to establish a Gulf Worker Resilience Fund, before the return wave arrives rather than after. This fund, capitalized jointly by the government and the commercial banking sector, should provide short-term income support for returning workers, retraining subsidies for those willing to pivot toward domestic manufacturing or digital services, and facilitated loan restructuring for households that financed migration through formal or informal debt.

The government should also open direct conversations with Gulf employers and labour ministries now, while bilateral relationships are intact, to negotiate extended contract protections and early warning mechanisms for workforce reductions, because advance notice of even three to six months dramatically improves Bangladesh's ability to absorb the shock.

3. The third recommendation is to use the $80-90 oil floor as a forcing function to finally accelerate the renewable energy transition with genuine urgency. Every year of delay at $65 oil had a political economic explanation. At $85 oil that explanation no longer holds. The government should issue an emergency call for rooftop solar proposals across all export processing zones and industrial clusters, fast-track the regulatory approvals for private renewable power generation that have been sitting in the pipeline for years, and open bilateral electricity trade conversations with neighbors.

Even at a modest initial scale, this reduces BPC's subsidy burden and sends exactly the right signal to multilateral climate finance institutions whose concessional capital Bangladesh needs to access.

4. The fourth recommendation is genuinely outside the box, but I believe it deserves serious consideration. The Trump administration is currently signing bilateral critical minerals framework agreements at remarkable speed with countries across Asia, Africa and Latin America.

Bangladesh does not have the mineral endowments of Peru or Morocco, but it has a large and trainable manufacturing workforce, proven execution capacity in industrial production, and a geography that sits strategically between India and Southeast Asia.

The government should approach both Washington and Brussels about positioning Bangladesh as a processing and refining hub for critical minerals sourced elsewhere in the region, an intermediary manufacturing role similar to what South Korea built over decades but at a lower cost base and with the advantage of entering the conversation precisely when the architecture is still being designed.

This is a ten-year play, but the window to get into the room is open right now and will not stay open indefinitely.

5. The fifth recommendation is a transparent fiscal adjustment. The government should convene an emergency review of the capital expenditure pipeline and identify which projects can absorb deferral without structural damage, creating fiscal headroom for the social protection spending that the coming shock will require.

Households that are simultaneously hit by higher food prices, a weaker taka, returning family members from the Gulf, and tighter credit are going to need visible government support, and that support must be funded from somewhere.

A publicly communicated, IMF-coordinated fiscal framework that makes these trade-offs explicit is not a sign of weakness. In the current environment it is the single clearest signal of governing competence that the administration could send.

The situation is manageable. But it requires clear eyes about what is happening globally.

Sketch: TBS

Sajid Amit is a leading practitioner in international development, a strategy consultant, and an academic with experience in capital markets in the US and Bangladesh. 

Disclaimer: The views and opinions expressed in this article are those of the author and do not necessarily reflect the opinions and views of The Business Standard.