FROM PAGE B1

face lower remittances from the Middle East as the ongoing conflict in the region weakens labour demand and squeezes migrant worker incomes.

Nearly half of Bangladesh’s more than $30 billion in annual remittances comes 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 FY25, according to the Bangladesh Economic Review 2025.

Bankers and analysts said the spike in the inflow was largely because of the Eid festival, political stability and an increased rate of the US dollar following a slight depreciation of the taka.

Md Shaheen Iqbal, additional managing director & head of wholesale banking at BRAC Bank, said another factor is that migrants try to send home more during any crisis period. “We have seen this trend during the initial days of the Russia-Ukraine war. A similar thing may happen this time.”

He said the inflow may fall this month but recover in the next month ahead of Eid-ul-Azha. However, the remittance inflows in the later months will depend on the war, he said.

Deen Islam, professor of economics at Dhaka University, said the recent surge in remittance inflows provides meaningful short-term relief to Bangladesh’s external sector, but its sustainability remains uncertain in the current global context.

“Much of Bangladesh’s remittance originates from migrant workers in Gulf Cooperation Council (GCC) economies, making flows sensitive to oil price cycles, fiscal conditions in host countries, and evolving labour nationalisation policies,” he said.

“Additionally, tighter immigration regimes in advanced economies and global economic slowdown risks could constrain future migration and earnings growth.”

During the July-February period of the fiscal year 2025-26, over 10 lakh migrant workers left for jobs abroad, up 15 percent YoY, according to official data.

Birupaksha Paul, a professor of economics at the State University of New York, USA, said imports may increase following the return of political stability in the country after the election.

“There is a concern that pressure is likely to build on Bangladesh’s foreign exchange reserves to pay higher import bills,” he said. “Foreign exchange reserves will not increase in that case.”

In this context, he said, the foreign exchange rate should be re-evaluated. “Some people doubt that it is not yet fully market-based and not reflecting the market price,” he said, adding that any depreciation will fuel import-induced inflation.

“But reserve management is a crucial thing,” said Paul, former chief economist at the BB.

Prof Islam said while the increase in remittance strengthens the balance of payments, supports exchange rate stability, and boosts domestic consumption, it also reinforces a structural dependence on external labour income rather than productivity-driven export growth.

“Therefore, although remittances will likely remain a vital pillar of macroeconomic stability in the near term, their long-run sustainability and developmental impact depend on diversification of migration destinations, skill upgrading of workers, and complementary policies to channel inflows into productive investment rather than predominantly consumption.”