Bangladesh’s economy at risk
The intensifying Iran-Israel conflict has created ripples across the globe, affecting economies far removed from the battle zones. Bangladesh is no exception. While oil prices rise amid instability in the Middle East and key sea routes such as the Suez Canal and Strait of Hormuz become insecure, Bangladesh is confronted with multiple economic stresses, from inflation and crippling import bills to declining remittances and strained foreign reserves.
The most immediate concern is rising oil prices. Bangladesh, which imports most of its crude oil from the Gulf states, is especially vulnerable. Higher fuel prices feed directly into production costs across the economy, from manufacturing to agriculture. The mechanism is straightforward: cost-push inflation, where businesses pass on rising costs of purchase and transport to consumers. The inflation rate has already crossed double digits, and higher fuel prices are likely to push it further. Supply-side inflation will be difficult to manage, especially as fiscal space has tightened under the interim government.
Bangladesh’s economy has long relied on expatriate remittances, largely from the Gulf. In 2024, the country earned around $27 billion in remittances, about 6 percent of GDP, with most receipts coming from Saudi Arabia, the UAE, Qatar, Kuwait and Oman. Any major escalation in hostilities could trigger mass job losses or force expatriates to return home, adding pressure on families and local consumer demand.
Remittances also sustain foreign reserves, which have fallen from a peak of about $45 billion in 2021 to around $25 billion presently, equivalent to some four months of import bills. If remittance inflows weaken and export earnings fall, reserves will decline further, forcing the Bangladesh Bank to let the taka depreciate further. Even if a weaker taka boosts export competitiveness, it will raise import costs and foreign currency obligations, straining the current account and the budget’s capacity for debt repayment.
Exporters, especially in the ready-made garments sector that generates over 80 percent of export earnings, face additional headwinds. Rerouted shipping to avoid the Red Sea would add shipping time and costs, cutting into profit margins. Delays could erode Bangladesh’s reputation for timely delivery. Combined with muted consumer spending in the US and EU, as inflation bites in those markets, demand for Bangladeshi goods may falter. Rising costs and falling demand could dent export volumes, reduce foreign currency inflows and pressure GDP growth.
Agriculture and domestic industry are not insulated. Fuel powers mechanised farming, irrigation and transport. Manufacturers facing higher input costs must either absorb losses or pass them on, contributing to food price inflation. The government could be forced to reinstate subsidies, further straining the budget.
Bangladesh’s financial sector, already struggling with high non-performing loans, faces fresh risks. Capital adequacy is thin, and credit growth could stall as lenders become cautious. Sustained high inflation and a weaker currency would likely increase defaults, weakening bank balance sheets. The stock market, already under strain, could see deeper losses as investors retreat amid growing uncertainty.
Bangladesh must act swiftly. Policies could include setting up fuel hedging arrangements or long-term contracts to limit price shocks, strengthening reserves management, creating a remittance stabilisation fund, subsidising shipping for garments and food, and offering targeted aid to vulnerable sectors. These steps, alongside fiscal discipline, could protect livelihoods and sustain growth.
The Iran-Israel war may seem distant, but its financial shockwaves have already reached Dhaka. To steer through this storm, Bangladesh needs coordinated action, visionary leadership and bold policymaking to avert deeper economic distress.
Property sector concerns in china
Premier Li Qiang’s remarks on further shoring up the property sector and escalating policy support are said to be indicative of Beijing’s lingering concerns over the sector – once an economic pillar for China – that remains a drag on growth and consumption, as seen in the latest statistics.
Analysts say that while there is no quick fix to the woes, Beijing has grown more wary of the impact on overall sentiment and domestic demand, as the economy grapples with external turmoil.
A State Council meeting convened by Li on Friday set a more definitive tone on supporting China’s property market, which came ahead of Monday’s release of key economic data for the January-May period.
The meeting underscored the need to “further optimise existing policies and enhance systematic synergy of implementation” to stabilise expectations, stimulate demand and mitigate risks, the state’s Xinhua reported.
Specifically, there will be a thorough stocktake of ongoing projects and land supplies, and urban-renewal projects will receive more land supply and financing aid.
Once again, the meeting stated that the ultimate goal is to “halt the decline and stabilise the sector”.
The tone and signal conveyed by the meeting sent property stocks surging on Monday’s trading sessions on the mainland and in Hong Kong.
Property investment, which has long weighed on the economy, continued to decline, as evidenced by the latest monthly economic data released on Monday. It fell 10.7 percent, year on year, in the first five months, compared with a 10.3 percent drop in the first four months.
Rui Meng, an economics professor at the China Europe International Business School in Shanghai, said Beijing was likely more concerned about the “negative wealth effect” and toll on confidence and spending than the property slump itself.
India’s Economy Grows 7.4pc in Q4 FY25
The rupee weakened slightly due to volatile FPI flows and higher oil prices but remains stronger than earlier lows. CareEdge projects a stable FY26 with moderate inflation, steady growth, and continued investment momentum.
India’s economy continues to demonstrate resilience amid global uncertainties, as the country’s real GDP grew by 7.4 percent in the fourth quarter of FY25, bringing full-year growth to 6.5 percent, surpassing expectations, according to the recent CareEdge Economic Pathways report. The report reflects that, although this marks a moderation from the 8.4 percent average seen in the previous two years, the economy remains on a strong footing. Growth in FY26 is projected at 6.2 percent.
The services and construction sectors drove the economic momentum, with construction activity growing by 10.8 percent in Q4. Manufacturing showed improvement, while private consumption moderated. Additionally, urban demand remained mixed, but rural demand was steady, supported by robust wage growth. Meanwhile, household savings declined for the third consecutive year to 18.1 percent of GDP, while financial liabilities rose to 6.2 percent, reflecting increasing household leverage.
Retail inflation eased significantly, with CPI dropping to 3.2 percent in April 2025, marking its lowest level since August 2019. Food inflation moderated sharply, helped by the arrival of Rabi harvests, comfortable reservoir levels, and projections of above-normal rainfall. However, prices of edible oils and fruits remained elevated, restricting further upside in the overall food inflation. Inflation is expected to average 4.0 percent in FY26, down from 4.6 percent in FY25.
On the fiscal side, the central government maintained the FY25 deficit at 4.8 percent of GDP. While direct tax collections were slightly lower, strong corporate tax revenues and restrained spending helped contain the shortfall. Capital expenditure exceeded expectations at 10.5 trillion, with a notable pickup in both central and state spending in the second half of FY25.
Japan economic revitalization minister holds telephone talks with U.S.
Ryosei Akazawa, minister in charge of economic revitalization, held telephone talks with U.S. Commerce Secretary Howard Lutnick for about 30 minutes on Saturday.
It was the second consecutive day that Akazawa, who was visiting the United States for negotiations over U.S. President Trump’s tariff policy, spoke with Lutnick following an in-person meeting on Friday.
The Japanese and U.S. governments intend to negotiate right up until the meeting between Prime Minster Shigeru Ishiba and U.S. President Donald Trump scheduled on the sidelines of the Group of Seven summit to be held in Canada from Sunday to Tuesday.
Sri Lanka has ’no room for policy errors’ in economic reforms: IMF
Sri Lanka has made substantial progress on an IMF-supported economic reform program, but more work is needed to reduce the Asian country’s 24.5 percent poverty rate, tackle corruption and reduce domestic debt, the global lender’s No. 2 official said Monday.
In remarks prepared for a conference in Colombo, Gita Gopinath, first deputy managing director of the International Monetary Fund, said Sri Lanka’s reforms had tested the country’s social fabric, but also paved the way for a more resilient future.
Sri Lanka, which plunged into financial crisis due to a record shortage of dollars three years ago, has recovered strongly since securing a four-year program from the global lender in March 2023.
The country in April reached a staff-level agreement with the IMF on a fourth review of the bailout package, which will give it access to about $344 million in financing upon board approval.
“Substantial progress has been made to restore macroeconomic stability and reduce hardships faced by people,” Gopinath said, citing renewed availability of fuel, cooking gas and medicines, economic growth of 5 percent in 2024 and a sharp increase in tax revenues.
“We must now turn our focus from crisis response to sustainable recovery. There is a lot that is still needed,” she said, urging Sri Lankan authorities to keep working on governance reforms and reducing poverty and debt.
Sri Lanka and other small open economies also now faced major risks given tariffs, geopolitical conflict and economic fragmentation, Gopinath said.
She said Sri Lanka’s debt restructuring had resulted in improved methodologies for evaluating state-contingent features in debt contracts that link payments to a country’s capacity to pay, as well as sparking certain IMF reforms.
Challenges included facilitating collaboration among a range of official creditors, including France, Japan, India and China, and including domestic debt in the restructuring plans, albeit by focusing on lower interest rates and longer maturities instead of nominal debt reductions, she said.
Singapore and Indonesia strengthen economic ties
Singapore and Indonesia have reaffirmed their commitment to strengthening economic ties at a high-level bilateral meeting held in Singapore on June 15.
The 15th Singapore-Indonesia Six Bilateral Economic Working Groups Ministerial Meeting or 6WG MM was co-chaired by Deputy Prime Minister Gan Kim Yong and Indonesian Coordinating Minister for Economic Affairs Airlangga Hartarto.
The meeting is a key economic platform between Singapore and Indonesia to advance economic cooperation in six areas. These are namely the Batam, Bintan and Karimun (BBK) region and other special economic zones, investments, manpower, transport, agribusiness and tourism.
This latest bilateral meeting comes after the two countries signed three deals on clean energy and sustainable development during a visit by Singapore’s Minister-in-charge of Energy and Science & Technology Tan See Leng to Jakarta on June 13.
Indonesian President Prabowo Subianto is also set to make his first state visit to Singapore on June 16.
These bilateral engagements between Singapore and Indonesia come at a time of uncertainty in global politics.
Bilateral trade between Singapore and Indonesia has grown steadily over the last few years, with both countries being among each other’s largest trading partners.
In 2024, bilateral trade reached US$57.6 billion (S$73.8 billion).
Singapore has been Indonesia’s top source of foreign direct investment (FDI) every year since 2014, with FDI flow into Indonesia exceeding US$20.1 billion in 2024.
On June 15, Mr Gan, who is also Minister for Trade and Industry, and Mr Airlangga also witnessed the signing of two commercial agreements at the 6WG MM.
One agreement is an affirmation letter between Singapore’s Sembcorp Development and Indonesia’s PT Batamraya Sukses Perkasa on their commitment to collaborate on low-carbon industrial parks in the BBK region.
The two companies are jointly developing the 100ha Tembesi Innovation District, which aims to attract sustainability-focused tenants, and will generate 20,000 jobs when it is fully developed.
The other agreement is a memorandum of understanding between the Singapore Semiconductor Industry Association and the Indonesian Chamber of Commerce and Industry.
The associations will join forces to expand market access between semiconductor and electronics companies in Singapore and Indonesia.