Crisis will increase in the economy

Farhad Chowdhury: One after another global shock is felt on the country’s economy and trade. The shock started in 2020 with the Corona pandemic. After that Russia-Ukraine war, Palestine-Israel war also damaged Bangladesh. The latest Iran-Israel war is eyeing the global economy as well as the country’s economy. Economists and analysts believe that if this war is prolonged, it will bring disaster to the economy.
Iran-Israel counterattacks have already started to have a negative impact on global trade. In the space of a day, the price of fuel oil in the world market has increased by more than $3 per barrel. The price of gold in the world market increased by more than 6 percent in one day. The negative impact was observed on Friday in the stock markets of most Asian countries.
It is feared that if there is no improvement in the war situation, the fuel oil and gold market will become more turbulent within a couple of days. And if the price of fuel continues to rise, it will have a negative impact on Bangladesh. Apart from this, if this war is prolonged, the import and export of the country will be severely hampered. Import costs will increase, product prices will increase. Not only that, but donor agencies may cut back on aid – this may even halt development projects. In addition, the large labor market in the Middle East may also suffer. There is a danger of collapse in the export of manpower.
Professor Mostafizur Rahman, an honorary fellow of the research institute Center for Policy Dialogue (CPD) said in the light of time that the negative impact of the Iran-Israel attack-retaliation on the world economy and the economy of the country will depend on how long this war will last. If it stops short, the damage will be minimal and it will be good for everyone. And if the fight is prolonged, the loss of economy and trade will be more.
He said that the immediate effects of the ongoing counter-attacks between the two countries have already begun. In one day, the price of fuel oil has increased in the world market. If the price of fuel continues to rise like this, it will definitely have a negative impact on Bangladesh. Secondly, the import-export trade of Bangladesh will be hindered as a result of this fight. Because most of the import-export trade of Bangladesh is done by using the sea route of the Gulf area. Ship owners can now avoid this route and take the goods by turning around. This will increase the import and export costs of Bangladesh. As a result of this, there is a danger that the export income will decrease on the one hand, and on the other hand, if the import cost of consumer goods increases, the price of goods in the country’s market may also increase. Inflation is already high in the country, common people are suffering. If the price of goods increases due to this war, the level of suffering of the people of the country will increase.
Professor Mostafizur Rahman also said that if the Iran-Israel war is prolonged, donor organizations may also reduce financial assistance. As a result, the country’s development projects may be hampered. Bangladesh has suffered a lot due to the Russia-Ukraine war, and is still suffering. So I think, in this situation, the government of our country should give importance to a few things. First of all, initiatives should be taken to fix the internal economic management. Turbulent market management needs to be fixed. Importance should be given to increasing domestic production.
Fuel oil prices increased due to retaliatory attack: The price of fuel oil increased in the world market after the incident of Israeli missile attack on a target of Iran. Oil prices rose as much as $3 a barrel on Friday on fears that Middle East oil supplies could be disrupted after an Israeli missile attack, according to a Reuters report. However, the rate of growth has slowed slightly since then.
Brent crude rose $2.63 cents, or 3 percent, to $89.74 a barrel after the attack on Iran, according to Reuters. At the same time, the price of West Texas Intermediate or WTI crude increased by $2.56 or 3.1 percent to $84.66 per barrel.
Brent crude, the international benchmark for oil purchases, rose 1.8 percent to $88 a barrel. Gold prices, on the other hand, briefly came close to touching record highs, currently reaching $2,400 per ounce.
Investors have been closely watching Israel’s possible response since Iran launched direct drone and missile attacks on Israel last week. Now there are fears of oil supply disruptions in the escalating conflict in the Middle East following the retaliatory attacks, which is now a concern. Oil prices also initially rose 3.5 percent.
Inflation can occur due to increase in oil prices. Many countries are highly dependent on oil for fuel such as petrol and diesel. Rising fuel and energy costs have been a major cause of the rise in the cost of living around the world in recent years.
Tensions have risen in the Middle East, raising concerns about the normality of shipping through the Strait of Hormuz between Oman and Iran. It is an important shipping route because about 20 percent of the world’s total oil is delivered through the Strait of Hormuz.
Members of the oil-producing cartel OPEC export most of their oil through Saudi Arabia, Iran, the United Arab Emirates, Kuwait and Iraq. According to data from the US Energy Information Administration, Iran is the seventh largest oil producer in the world and the third largest member of OPEC.
The situation in this region has affected the stock market of Asia, the share index of many countries has decreased. Japan’s Nikkei 225 index fell 2.7 percent, Hong Kong’s Hang Seng index fell 1.2 percent and South Korea’s Kospi index fell nearly 1.7 percent.
Worried entrepreneurs: The businessmen of the country have become extremely worried about the ongoing attacks and counter-attacks between Iran and Israel. They fear that this war may turn into World War III. In this regard, the Executive President of Bangladesh Knitwear Manufacturers and Exporters Association (BKMEA) Mohammad Hatim told Time on Friday, “We are extremely worried about the ongoing war between the two countries.” We fear whether this war will turn into the third world war or not. Are other countries including America involved in this war or not? If it turns in that direction, it will bring disaster to the economy and trade of our country as well as world trade. Almost all of the products that are exported or imported from our country to the Europe-America region are done through this sea channel in the Middle East. If this channel is somehow closed due to the war, then the trade and commerce of the country will come to a standstill.
Mohammad Hatim also said that since the corona epidemic of 2020, our economy and trade have been hit one after another. Somehow, we have sustained the business by facing various crises, now if this war hits then tough days are waiting for us. We see no hope ahead. One after another we are going backwards.
There may be a shock in the labor market: prominent economist and executive director of the Policy Research Institute Ahsan H. Mansoor thinks that if the Iran-Israel war is prolonged or if America gets involved in this war, there may be a big shock in the labor market of Bangladesh. Because this war will cause stagnation in the entire Middle East. Expatriate Bangladeshis may return home in fear of their lives. If this happens, the annual expatriate income of $20-22 billion will also suffer. If expatriate income decreases, reserves will be strained. Depletion of reserves will hamper imports. Thus one is connected with the other. So, this fight is a threat to world trade as well as an extremely ominous signal for the country’s economy and trade.