Iran war disruptions spark higher costs and lost income in Bangladesh

DHAKA, Bangladesh (AP) — Tariqul Islam lost his savings after setbacks in his clothing business about a year and a half ago and turned to ride-sharing on his motorbike to make ends meet. Until recently, he spent hours in fuel lines as supply disruptions linked to the war in Iran ripple into Bangladesh.

The 53-year-old father of four fears the strain will worsen if the war drags on, saying long hours waiting for fuel have sharply cut his income and made it increasingly difficult to support his family in Dhaka, the nation's capital, including a daughter at university and a son in college.

“My family was managing fairly well through ride-sharing," he said. “But after the fuel shortage began, I would buy fuel one day and run the bike for two days. As a result, I had to sit idle for one day, which reduced my income.”

The strain in Islam's household reflects a broader squeeze in Bangladesh, heavily dependent on imported fuel, where energy shortages have disrupted daily life, slowed industrial output and raised concerns about economic growth as global tensions push up costs and strain supplies.

Conditions have eased slightly in recent days, with shorter queues at fuel stations after the government increased supplies, but concerns persist across sectors.

Across Asia, governments are facing similar strains as the war-driven surge in energy prices rattles economies dependent on imported oil and gas.

The continent is exposed because it relies on imported fuel, much of it passing through the Strait of Hormuz — a chokepoint for about a fifth of global oil and natural gas trade.

Higher fuel costs are leading to inflation and squeezing household budgets, while industries from manufacturing to transport are facing rising operating costs and supply disruptions.

The Asian Development Bank in late April cut growth forecasts for developing Asia and the Pacific, warning that war-driven energy disruptions would slow economies and fuel inflation. It now expects growth of 4.7% in 2026, with inflation rising to 5.2% as oil prices climb and financial conditions tighten.

Many are hoping for a quick end to the conflict and a return to normal.

“If this situation continues, we will have to move back to our village and find some other way to earn a living,” Islam, the struggling father said. It is not possible to survive in Dhaka by doing ride-sharing under these conditions.”

Energy crunch weighs on Bangladesh’s economy

Rising energy prices are also expected to strain Bangladesh’s finances, with the government likely to spend an additional $1.07 billion on LNG subsidies in the April-June quarter alone if global prices remain high.

Bangladesh has sought supplies from its big neighbor India, which has responded positively as it has diversified sources, including Russia, of fuel.

Already, authorities have imposed austerity measures to manage the crisis as global lenders warn of slower growth in the nation of more than 170 million people. Gas and diesel shortages have triggered more frequent power cuts in industrial zones.

The government has also shut fertilizer factories to divert gas to power plants, restricted evening hours for shopping malls and introduced fuel rationing.

The World Bank said in April it expects growth in Bangladesh to slow to 3.9% in the fiscal year ending in June 2026, warning that a prolonged Middle East conflict could fuel inflation, widen the current account deficit and strain public finances through higher energy subsidies.

Jean Pesme, the World Bank’s division director for Bangladesh and Bhutan, said the economy already faced “pre-existing vulnerabilities and challenges, in particular on the economic and employment front.”

The rising costs now are “obviously making the fiscal situation more difficult.”

He also warned that authorities should be cautious in raising fuel prices, saying higher costs could hurt farmers and agriculture.

Bangladesh garment industry is hit as exports slow

The energy crunch is also driving up costs and threatening Bangladesh’s garment exports, the backbone of its economy, business leaders say.

Anwar-Ul Alam Chowdhury, president of the Bangladesh Chamber of Industries, said exports to Europe and the U.S. could face a significant setback. Shipments have fallen between 5% and 13% in recent months, he said. He worries that customers could lose confidence in Bangladesh’s ability to deliver and that competitor nations such as India, Vietnam and Cambodia could gain market share if the crisis persists.

Chowdhury said factory output has dropped by 30% to 40% for various reasons and that the situation has worsened since the U.S. and Israel launched their war against Iran, while business costs have risen by about 35% to 40%.

Bangladesh, the world’s second-largest garment exporter after China, earns about $39 billion annually from the sector, which employs around 4 million workers, mostly women from rural areas.

Alvi Islam, director of Arrival Fashion Limited, said manufacturers are facing higher costs for petroleum-based materials such as sewing threads, poly bags — plastic bags used in packaging — and cartons, while spending more on diesel generators to cope with frequent power cuts.

His company, which exports products worth about $40 million annually, now runs generators at least four hours a day during production.

“For that reason, the cost of doing business for exporting garments has increased quite significantly in past one month,” he said.

Workers worry about livelihoods

Garment worker Mosammet Runa, 35, said she fears for her family’s future if the war continues.

“Millions of people like us depend on this industry. It is how we survive,” said Runa, who, along with her husband, earns about $400 a month to support their family of six.

She said a prolonged conflict could wipe out jobs and called for an end to the fighting.

“We are innocent people. The world should not make us victims," she said.

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AP journalist Al Emrun Garjon contributed to this report.