Home ›› 25 Feb 2022 ›› Front
A prolonged Russia-Ukraine war will impact Bangladesh’s trade and investment engagements with major European countries – including the invader Russia, warns economists and political analysts.
They added that the recent spike in prices of crude oil and commodities will accelerate further following the abrupt invasion of Ukraine. Cereal prices will shoot up too as Russia is a major exporter of wheat in the global market.
Exporters point out that Russia is one of the emerging markets for Bangladeshi products, and any crisis in that region is going to weigh heavily on the manufacturing sector.
Prof Imtiaz Ahmed, a professor of International Relations at the Dhaka University, said, “Bangladesh should handle the situation carefully. At present, we have nothing to worry about, but if it [the conflict] spreads all over Europe, we will suffer.
“The US may halt Swift code for Russia, but this country has invested in Bangladesh to set up the Rooppur Nuclear Power Plant. Besides, Europe is our big export destination. So we may follow the Indian policy, as they have already said that India will not be involved in this matter.”
According to the European Commission, the EU is Bangladesh’s main trading partner, accounting for around 19.5 per cent of Bangladesh’s total trade in 2020. Bangladesh exported $17.46 billion in FY21, which is around 45 per cent of the total exports reaching $38.76 billion.
On the other hand, Bangladesh’s exports to Russia reached $665 million in the same period, and of the figure, $607 million came from apparel and textile items. Bangladesh imported goods worth around $482 million from Russia, and $323 million was in cereals.
Bangladesh also imported cereals worth $271 million from Ukraine. Bangladesh is largely dependent on Russia and Ukraine for cereal imports.
Addressing the issue, Bangladesh Garment Manufacturers and Exporters Association (BGMEA) Vice President Shahidullah Azim said, “We had planned two roadshows in Russia to capture their apparel market, which will be infeasible due to the recent crisis.
“Russia is our emerging market. Currently, we export a large amount of apparel goods to Russia directly and also through Europe. The current crisis is jeopardizing our business. Fuel prices are already going up in the global market, which in turn will increase raw materials prices and freight fare. So our production costs will rise yet again.”
Diplomats and international trade experts said it is difficult to calculate at the moment how this conflict would impact Bangladesh. But the recent fuel and LNG price hikes are a direct hit to our economy. Besides, many Bangladeshis working in Ukraine legally and illegally will be forced to return home.
Dr MA Razzaque, an economist specialising in applied international trade, said, “In the current situation, Bangladesh is a safe zone, but if it [the conflict] goes on for a long time, the supply chain will be disrupted.
“Even the western community wants us to get involved with them and pressure Russia. In that case, Bangladesh’s bilateral trade with Russia will be disrupted. So, the government should handle it carefully because Russia is our emerging market.”
Razzaque and Imtiaz said due to the fuel price hike, Europe may face inflation and consumers of this region may reduce their living costs, which will directly hit Bangladesh’s economy.
Imtiaz however said inflation in Europe may open a new window for Bangladesh, as the country manufactures low cost clothing items.
“When purchase capacity goes down, consumers look for low prices. It could open a new window for us, even though we do not want any war,” he said.
