Bangladesh's economy is facing growing strain from a prolonged energy crisis, with policymakers caught between controlling inflation, stabilising the currency and maintaining growth, according to the Economic Update & Outlook (March 2026) released by the Planning Commission.
The report warns that rising global fuel prices, persistent subsidy burdens and structural weaknesses in the energy sector are converging to create a complex economic challenge that could intensify inflation and weaken fiscal stability.
Policy balancing act under pressure
The report highlights a difficult policy environment where authorities must carefully balance competing priorities. Efforts to stabilise the exchange rate risk depleting foreign exchange reserves, while allowing the currency to depreciate further could push inflation even higher.
Officials are already struggling to maintain energy subsidies introduced to shield consumers from global price shocks. However, rising import costs and market volatility are making this increasingly difficult to sustain, placing additional pressure on public finances.
The Planning Commission notes that inconsistencies in past communication on fuel stocks and supply conditions have also contributed to uncertainty, weakening public trust in energy management.
Global oil surge increases import burden
The situation has been further complicated by a sharp rise in global oil prices, which recently climbed back above $100 per barrel amid geopolitical tensions linked to maritime restrictions in the Strait of Hormuz.
Economists estimate that every $10 increase in global oil prices adds around $1 billion to Bangladesh's annual import bill. If prices remain above $120 per barrel for a prolonged period, the additional burden could reach $4-5 billion per year, equivalent to nearly Tk 61,000 crore.
Experts warn that such external shocks have direct implications for domestic inflation, subsidy allocations and foreign exchange stability, given Bangladesh's heavy reliance on imported energy.
Inflation rising as wages lag behind
Domestic inflationary pressure continues to mount. According to the Bangladesh Bureau of Statistics, inflation rose to 9.13 per cent in February, up from 8.58 per cent in January. Food inflation climbed further to 9.30 per cent, overtaking non-food inflation and becoming the main driver of price increases.
At the same time, wage growth stood at 8.06 per cent, significantly below inflation levels. This widening gap is eroding real incomes, particularly among low- and middle-income households, and is expected to dampen consumption in the coming months.
The report warns that sustained global energy pressure is likely to keep inflation elevated while increasing the government's fiscal burden through continued subsidy support.
Structural weaknesses and energy security risks
Energy experts say Bangladesh's heavy dependence on imported fuel has left the economy highly exposed to global volatility. Former energy adviser Dr M. Tamim noted that the country's limited domestic production capacity and lack of long-term exploration planning have worsened vulnerability during global disruptions.
He pointed out that fuel reserves were once as low as two days and currently stand at around seven to fifteen days, which remains insufficient to cushion external shocks.
Dr Tamim also questioned the financial management of Bangladesh Petroleum Corporation, arguing that profits generated over the years were not preserved for crisis periods, reducing the country's ability to respond effectively during emergencies.
Call for strategic reserves and efficiency reforms
Energy expert Professor Ijaz Hossain of Bangladesh University of Engineering and Technology emphasised the need for a structured long-term response. He recommended building strategic fuel reserves and improving energy efficiency to reduce vulnerability.
He suggested that maintaining even 45 days of fuel stock would significantly improve resilience, allowing the country to manage price fluctuations more effectively by purchasing fuel during low-price periods and using reserves during spikes.
The report also highlights a significant gas supply gap, with production below 2,700 million cubic feet per day against a demand of around 4,000 million cubic feet per day, underscoring the continuing structural shortfall in the energy sector.
Outlook remains uncertain
The Planning Commission concludes that the energy crisis is not a short-term disruption but a structural challenge with long-term implications. Without sustained reforms in energy planning, supply diversification and fiscal management, Bangladesh may continue to face inflationary pressure and external vulnerability in the years ahead.
