STAR BUSINESS REPORT

Bangladesh and other South Asian countries could face lower remittances from the Middle East as the ongoing conflict in the region weakens labour demand and squeezes migrant worker incomes, according to new research by the Asian Development Bank (ADB).

The report, released yesterday, estimates that the conflict could lower economic growth in developing Asia and the Pacific by up to 1.3 percentage points over 2026-2027 and push inflation up by 3.2 percentage points if energy market disruptions persist beyond a year.

Nearly half of Bangladesh’s more than $30 billion in annual remittances come from the Middle East. Saudi Arabia, Oman, Qatar, the UAE, and Kuwait together accounted for 86 percent of Bangladeshi migrant workers who secured jobs abroad in fiscal year 2024-25, according to the Bangladesh Economic Review 2025.

The disruption is already visible. Hundreds of Middle East-bound flights from Bangladesh have been cancelled since the escalation of the US-Israel war on Iran, mostly affecting migrant workers.

The ADB warned that a remittance shock could compound the effects of higher energy prices and tighter external financing conditions by simultaneously weakening foreign currency inflows and household demand.

“This channel is especially important because remittance dependence does not always align with exposure based on trade or energy indicators, and may therefore represent an additional source of macroeconomic vulnerability,” the report said.

The report said remittances to many Asian economies have historically exhibited countercyclical behaviour, often increasing and providing an important buffer during periods of stress.

“However, the current shock may differ, as it is centred in the Middle East -- a significant migration destination and source of remittances,” the report said, adding that economies in South Asia appear particularly exposed, The