Bangladesh’s exporters are growing increasingly anxious as escalating military tensions across the Middle East threaten to disrupt trade routes, increase shipping costs, and weaken demand in one of the country’s fastest-growing export markets.
According to international media reports, a joint military strike by the United States and Israel on Iran early Saturday triggered retaliatory attacks by Iran targeting Israeli positions as well as US military installations across several Middle Eastern countries. The escalating exchange of attacks has temporarily halted air connectivity across parts of the region, while Iran has reportedly closed the strategically vital Strait of Hormuz to all shipping traffic.
Although Bangladesh’s direct trade with Iran remains minimal due to longstanding international sanctions, exporters fear that broader regional instability could significantly disrupt exports to other Middle Eastern countries, which have emerged as important alternative markets for Bangladeshi goods.
Exporters say the closure of the Strait of Hormuz - one of the world’s most critical maritime trade routes - could sharply increase freight costs and delay shipments, creating new pressure on an already fragile export sector.
Limited Trade With Iran but Broader Regional Exposure: Bangladesh’s bilateral trade with Iran remains modest, slightly exceeding $10 million annually, largely consisting of Bangladeshi exports. Data from the Export Promotion Bureau (EPB) show that Bangladesh exported goods worth $10.9 million to Iran in fiscal year 2024-25.
The majority of exports included jute yarn valued at $10.83 million, alongside small volumes of knitwear and woven garments. Export performance to Iran has fluctuated in recent years, rising after the pandemic but declining again over the past two fiscal years.
Imports from Iran are even smaller. Bangladesh Bank data indicate that Bangladeshi businesses imported goods worth only $500,000 from Iran in FY2024-25, following several years of virtually no formal imports.
Historically, trade ties were stronger. More than a decade ago, Bangladesh imported goods worth Tk 449 crore from Iran during FY2010-11, but imports declined sharply afterward due to tightening international sanctions.
Despite limited direct trade, exporters warn that the broader Middle East conflict presents far greater risks.”We have not yet fully recovered from the shocks of the Russia-Ukraine war,” said Mohammad Hatem, President of the Bangladesh Knitwear Manufacturers and Exporters Association (BKMEA), speaking to The Daily Industry.
“Now another conflict involving Iran, the United States, and Israel has begun. With the Strait of Hormuz closed, maritime transport costs will increase significantly. At the same time, cargo flights have been suspended due to airspace restrictions. Altogether, we fear serious disruptions to exports.” Emerging Middle Eastern Markets at Risk: Exporters emphasize that the real concern lies not in Iran itself but in neighboring economies such as the United Arab Emirates (UAE), Saudi Arabia, Qatar, Bahrain, and Iraq - all growing destinations for Bangladeshi products.
Bangladesh exports garments, frozen fish, processed foods, fruits, vegetables, footwear, caps, and other consumer goods to these markets, many of which have expanded rapidly in recent years as exporters sought to diversify beyond traditional Western buyers.
EPB data show that Bangladesh exported goods worth $407.9 million to the UAE in FY2024-25, an increase of $23 million from the previous fiscal year. Exports to Saudi Arabia reached $246.2 million during the same period, also showing steady growth.Additional exports included $26 million to Qatar, $25.4 million to Kuwait, $9 million to Bahrain, and $2.7 million to Iraq.
Industry insiders warn that prolonged instability could reverse these gains.Nearly half of Bangladesh’s processed food exports are destined for Middle Eastern markets, according to exporters.
“If instability continues, many processed food exporters could face serious risks,” said Syed Muhammad Shoaib Hasan, Chief Executive Officer of Hifs Agro Food Industries, in comments to The Daily Industry.”Our company exports around $200,000 to $300,000 worth of processed food every month to the UAE, Saudi Arabia, Oman, and Qatar. Any prolonged disruption would significantly reduce shipments.” He added that exporters are already struggling with trade restrictions in neighboring markets such as India, leaving companies increasingly dependent on Middle Eastern demand.
Logistics Shock and Cost Pressures: The closure of the Strait of Hormuz poses one of the most immediate economic threats. Roughly one-fifth of global oil shipments pass through the narrow waterway, making it essential not only for energy markets but also for commercial shipping routes linking Asia with the Middle East and Europe.Exporters fear longer shipping routes, higher insurance premiums, and rising fuel costs - all of which could erode profit margins. Air cargo disruptions further complicate the situation. With regional airspace temporarily closed, time-sensitive exports such as fresh produce and high-value garments face delivery delays.Industry leaders warn that small and medium exporters will be particularly vulnerable, as they lack the financial capacity to absorb sudden cost increases.
Broader Economic Risks for Bangladesh: Economists say the impact of the conflict may extend far beyond exports, potentially affecting Bangladesh’s macroeconomic stability.M A Razzaque, Chairman of private research organization RAPID, told The Daily Industry that it is still too early to measure the full impact but warned of multiple risk channels.”The conflict has already influenced global oil prices, and LNG prices may also rise,” he said. “If energy costs increase, Bangladesh’s foreign exchange reserves will come under additional pressure.”
He also highlighted risks to remittance inflows, noting that millions of Bangladeshi migrant workers are employed across the Middle East.
“If workplaces are affected by conflict, workers may lose income temporarily, which could reduce remittance inflows - a key support for Bangladesh’s economy,” he added.
Global Financial Perspective: Dr Enayet Karim, a global financial expert, warned that the crisis could trigger wider economic consequences if tensions persist. Speaking to The Daily Industry, Dr Karim said the Middle East remains a critical node in global trade and energy supply chains.
“Bangladesh’s economy is highly sensitive to external shocks because of its dependence on imported energy and export-driven growth,” he explained. “A prolonged disruption in the Middle East could simultaneously increase fuel costs, weaken export logistics, and create uncertainty in global demand.”
According to him, the combined impact of higher shipping expenses, volatile currency markets, and rising insurance costs could squeeze exporters already facing inflationary pressures and tight financing conditions.Dr Karim also stressed the importance of proactive policy responses.
“The government should closely monitor freight rates, energy prices, and remittance flows while preparing contingency measures,” he said. “Diversifying export destinations and strengthening regional logistics partnerships will be essential to reduce vulnerability to geopolitical shocks.”
Need for Policy Preparedness: Exporters and economists alike are urging authorities to remain vigilant as the situation evolves.Analysts say Bangladesh has yet to fully recover from earlier global disruptions, including the pandemic and the Russia-Ukraine war, which already pushed up energy prices and freight costs.
The latest geopolitical tensions now threaten to create another wave of uncertainty at a time when exporters are struggling with rising production costs, dollar shortages, and weakening global demand.Experts believe that close monitoring, diplomatic engagement, and contingency planning will be crucial to minimizing economic fallout.
For Bangladesh’s exporters, the immediate concern remains clear: if instability spreads or shipping routes remain disrupted for an extended period, one of the country’s most promising export frontiers could suddenly become a source of economic vulnerability.As global tensions escalate, the resilience of Bangladesh’s export sector - and its ability to adapt quickly to geopolitical shocks - may once again be put to the test.
