How exposed is Bangladesh to a prolonged Saudi crisis?

Bangladesh is unlikely to see an immediate fall in remittances from Saudi Arabia even as Houthi attacks on the kingdom intensified from early October, but a slowdown in new migration could weigh on inflows in the years ahead. Following the attacks, migration to Saudi Arabia, the largest destination for Bangladeshi workers, has already been disrupted. As of Sunday, 144 direct and transit flights had been affected by prolonged flight restrictions at Saudi airports, disrupting the travel plans of around 22,000 passengers. But economists and manpower experts say remittance inflows are unlikely to be hit immediately because newly arrived migrant workers typically take about a year to start sending significant amounts of money home.

According to them, the longer-term impact will depend on the duration of the crisis, the performance of the Saudi economy and demand for labour, particularly in construction. A prolonged crisis that damages the Saudi economy could slow job creation and reduce workers’ incomes. But the outcome is not necessarily negative for the kingdom’s economy. If Houthi missile and drone attacks continue without damaging oilfields and refineries, higher global oil prices could boost Saudi revenues, potentially supporting investment and demand for foreign workers, according to Zahid Hussain, a former lead economist at the World Bank’s Dhaka office. “But everything is uncertain so far,” he commented. Remittances are a major source of foreign currency for Bangladesh, accounting for around 7. 5 per cent of gross domestic product, according to World Bank data. Their importance has grown amid volatility in global energy markets following the US-Israel war on Iran , which has sent shockwaves through sectors ranging from agriculture to the garment industry. In the…