Iran-Israel conflict: Looming threat to Bangladesh’s Middle East remittance lifeline

As geopolitical tensions escalate in the Middle East, concerns are mounting over their potential ripple effects on remittance-dependent economies like Bangladesh. The direct confrontation between Iran and Israel, along with the involvement of the United States, has injected fresh uncertainty into global energy markets and regional economic stability. For Bangladesh -- where nearly 70% of remittances originate from Middle Eastern nations -- the stakes are particularly high.

With around six million Bangladeshi expatriates working across Gulf countries and remittance inflows reaching a record $32.8 billion in 2025, any prolonged instability could pose significant risks to foreign exchange reserves, labour markets, and overall economic growth.

While experts suggest that short-term disruptions may not immediately derail remittance flows, a prolonged conflict could reshape employment opportunities and financial stability for millions of families dependent on overseas income.

According to recent data from Bangladesh Bank, around 65-70% of Bangladesh’s total remittances come from Middle Eastern countries. From July to January of the current fiscal year, the top remittance-sending countries were: Saudi Arabia $3,014 million, United Arab Emirates $2,667 million, Oman $1,131 million, Kuwait $975 million, Qatar $878 million.

Currently, around six million Bangladeshi expatriates are living in the Middle East. In the wake of the recent conflict, casualties among Bangladeshi nationals have been reported in the UAE and Bahrain.

Due to partial or complete airspace closures, 74 flights were canceled over three days at Hazrat Shahjalal International Airport in Dhaka, leaving thousands of expatriates in uncertainty. Many are unable to return to their workplaces after leave, while others face visa complications as their permits near expiration.

What are the risks if the war prolongs?

Analysts warn that if the conflict drags on, it could create multifaceted pressure on import-dependent and remittance-dependent economies like Bangladesh. Rising oil prices would increase import costs, affecting the broader economy. At the same time, deteriorating security conditions in Gulf countries could lead to the suspension of infrastructure projects, slower visa processing and recruitment, and contraction in employment opportunities.

Bangladesh’s labour market is heavily Middle East–centric. About 67% of total migrant workers go to Saudi Arabia. Qatar ranks second, followed by Kuwait, the UAE, and Jordan. Due to the war situation, nearly every Middle Eastern country now poses potential risks to Bangladesh’s overseas labour market.

According to the Bureau of Manpower, Employment and Training (BMET), 1,131,144 workers went abroad for employment in 2025. Of them, 754,369 (67%) workers went to Saudi Arabia.

Additionally, 107,596 went to Qatar, 42,241 to Kuwait, 13,752 to the UAE, and 12,301 to Jordan.

In the first two months of the current year, Saudi Arabia remained the top destination, with 108,919 workers migrating there. Singapore ranked second, followed by Qatar, Kuwait, Jordan, the UAE, and Iraq.

Bangladesh Bank's spokesman Arief Hossain Khan said, “It has only been three or four days since the war, so the impact is not yet clear. However, if the war is prolonged and expatriates lose their jobs, there will be a big impact on remittances.”

Professor Mustafizur Rahman is a Distinguished Fellow at the Centre for Policy Dialogue (CPD) said, “The situation is worrying. The duration of the conflict will determine how much damage will be done to the economy. If the current war spreads across the Middle East, there is a risk that remittance flows will decrease. This could have a profound impact on the Bangladeshi economy and the lives of ordinary people."

 Limited direct trade, greater indirect risks

Bangladesh’s direct trade with Iran is relatively small, with bilateral trade slightly exceeding $10 million. In fiscal year 2024–25, Bangladesh exported goods worth $10.9 million to Iran, mainly jute yarn and ready-made garments. Imports from Iran remain minimal, largely due to banking complications stemming from sanctions.

However, despite limited direct trade, indirect impacts could be significant-particularly through rising oil prices, increased shipping costs, and pressure on foreign exchange reserves.

Need for alternative labour markets and preparedness

Experts believe that a short-term conflict may not severely affect the labour market; reconstruction efforts could even increase demand for workers. However, a prolonged war could trigger large-scale employment disruptions, prompting many expatriates to return home.

Former World Bank lead economist Zahid Hussain told the Daily Sun that if the war remains short-lived -- ending within two weeks -- the labour market impact may be minimal, and reconstruction could boost labor demand. But if it becomes prolonged, there will be significant negative consequences: fear, uncertainty, and loss of jobs. Many expatriates may seek to return home.

He emphasised that the government should prepare contingency plans in advance, including strategies for repatriating workers if the conflict becomes long-term.

He further noted that Bangladesh’s overseas labour force largely consists of unskilled and semi-skilled workers, whose demand is mostly limited to Middle Eastern countries. In contrast, countries like Japan and European nations seek skilled workers. Significant investment in skill development would be necessary for Bangladesh to diversify its labour markets and reduce dependence on a single region.