The Platform

Naser I Hossain

The war in Ukraine has further worsened the already-existing problem of global supply chains. Like countries all over the world, Bangladesh is also dealing with the adverse impacts of global inflation that have caused food and fuel to be more expensive, and a decline in foreign currency reserves. However, in comparison to its neighbours, Bangladesh is still performing reasonably well.

Prices for basic commodities saw a rise as a result of the U.S.-China trade war in 2018 due to disruptions and delays. The situation got worse during the pandemic. And as countries were emerging from the pandemic, the war in Ukraine further impacted the global market by disrupting global logistics and supply chains.

As Ukraine supplies 17% of the world’s wheat and corn, and Russia contributes 16% as well as exports of oil, gas, fertilizer, and chemical goods, the war in Ukraine has made a burgeoning food crisis even worse. Blanket Russian sanctions, while necessary to deter the Kremlin, have also made it more difficult for farmers to access much-needed fertilizer.

Countries across the world are, therefore, facing serious economic turmoil. The U.S. inflation rate reached 8.6% in May which is higher than it has been in over 20 years. Turkey, Argentina, Brazil, China, and India are also suffering due to higher inflation, and increasing food and daily commodity prices.

In April, India saw its inflation rate hit 7.8%. India’s economic growth has slowed significantly due to slowing consumer demand amid soaring prices. Between September 2021 to April 2022, consumer food price inflation rose from 0.68% to 8.38%.

Pakistan is also witnessing economic turmoil, including high inflation, and a fast-weakening currency. Its inflation rate climbed to 13.8% in May due to rising food and fuel prices. The consumer food price rate surged to 17.3% in May.

As an importer of cooking oil, food, sugar, intermediate goods, fuel oil, and raw materials, Bangladesh is witnessing rising prices of food and consumer goods. The inflation rate in Bangladesh stands at 7.42%, up from 4.87% a year earlier, while the food inflation rate rose to 8.3%. Consumer prices rose to 7.42%, which is the highest in 8 years.

Apart from food, Bangladesh is also an energy importer. The increased prices of oil and natural gas have already been reflected in domestic prices. Thus, sectors like transport and agriculture have been adversely impacted. In addition, due to the looming energy crisis, Bangladesh, like many other South Asian countries, is also experiencing country-wide power blackouts. However, Bangladesh has been showing resilience in terms of inflation, food prices, and foreign currency reserves.

In terms of food inflation, Bangladesh has relatively stable food prices compared to Sri Lanka, Pakistan, India, and Nepal.

Regarding foreign currency reserves, Bangladesh is still in a decent position despite the lingering effects of the pandemic and the war in Ukraine. India’s foreign currency reserves have seen a reduction to $572 billion. In the case of Pakistan, they have been reduced from $23.2 billion to $16.4 billion while the foreign exchange reserves of Bangladesh saw a reduction from $46.1 billion to $39.77 billion.

While it is weathering the storm relatively well, prolonged global inflation and food price hikes could adversely affect Bangladesh’s people and the economy. Prolonged economic pressure could trigger social and political unrest.

The twin crises of the pandemic and Ukraine should ideally force Bangladesh to think differently about investing heavily in renewable energy and revolutionizing how it feeds its people.

Nishat Tasnim is an independent Researcher on Security Studies. She has completed her BSS in International Relations from the University of Dhaka. She also holds an MSS from the University of Dhaka with a specialization in Global Security Studies.