United News of Bangladesh

The Middle East conflict is approaching its 100-day mark, with U.S.-Iran talks still seesawing and the outlook for shipping through the Strait of Hormuz remaining uncertain. Since fighting broke out in late February, the war has spilled far beyond the region, disrupting energy supplies, reigniting inflationary pressures and unsettling financial markets. International institutions are now warning that the conflict is becoming a growing drag on the global economy. The Organization for Economic Cooperation and Development (OECD) and other bodies have recently lowered their forecasts for global growth, citing the prolonged conflict as a major source of uncertainty. What began as market concern over a short-term spike in oil prices has evolved into broader anxiety over weaker growth, higher inflation and longer-lasting damage to supply chains. ENERGY SUPPLY SHOCK The most immediate impact has come through energy supplies. The blockage of the Strait of Hormuz has triggered what the International Energy Agency (IEA) has described as the largest supply disruption in the history of the global oil market, pushing up oil and gas prices as well as shipping costs. According to a recent IEA report, global oil supply losses since February have reached 12.8 million barrels per day. Gulf producers affected by the closure of the strait are producing 14.4 million barrels per day less than before the war. Based on the daily shortfall of 12.8 million barrels, more than 1.2 billion barrels of supply have been affected since the conflict began, underscoring the strain on global energy inventories and transport capacity. The IEA expects global oil supply in 2026 to remain, on average, 3.9 million barrels per day lower, even if shipping through the strait gradually resumes. In a joint statement, the IEA and other bodies warned that if shipping fails to return to normal and global oil inventories continue to fall rapidly, global economic resilience could face serious risks. The shock is not limited to oil. The World Bank expects global energy prices to rise 24 percent in 2026 because of the conflict. Overall commodity prices are projected to increase 16 percent, driven mainly by energy, fertilizer and some metals. John Roper, chief executive for the Middle East at German energy company Uniper, said the strait's closure and damage to facilities took most of the gas supply growth between 2025 and 2026 off the market, warning that the pain from the supply shortfall could last at least until 2030. INFLATION PRESSURES RETURN The International Monetary Fund (IMF) said in a recent report that even under a scenario involving a short-lived conflict and moderate increases in energy and commodity prices, global inflation would reach 4.4 percent in 2026, significantly deviating from the recent disinflation trend. Signs of renewed inflationary pressure have already appeared in Europe and the United States. U.S. gasoline prices in April were more than 50 percent higher than before the war, while real disposable personal income fell for a third consecutive month. In the eurozone, inflation in France, Italy, Spain and Germany has stayed above the European Central Bank's 2 percent target for three months in a row, with higher energy costs spreading into food and services prices. "The longer the disruptions last, the larger the economic and social costs become," OECD Secretary-General Mathias Cormann said. Developing economies face a heavier burden. The World Bank expects inflation in developing economies to average 5.1 percent in 2026, 1 percentage point higher than prewar forecasts. "The poorest people, who spend the highest share of their income on food and fuels, will be hit the hardest, as will developing economies already struggling under heavy debt burdens," World Bank chief economist Indermit Gill said. "All of this is a reminder of a stark truth: war is development in reverse." GROWTH OUTLOOK DARKENS The conflict is also clouding the growth outlook. The OECD expects global growth to slow from 3.4 percent in 2025 to 2.8 percent in 2026, down 0.1 percentage point from its March forecast. If disruptions to Gulf energy production and exports persist into 2027, global growth in 2026 could fall further to 2.1 percent. The IMF has listed the Middle East conflict as a major test for the global economy, projecting growth to slow to 3.1 percent in 2026, down from its January forecast of 3.3 percent. The United Nations expects global growth of 2.5 percent, 0.2 percentage point lower than its January projection. The war is weighing on growth through inflation, consumption and investment. Higher energy and raw material costs squeeze corporate profits and dampen investment appetite. Rising prices erode real incomes and curb consumer spending. Higher financing costs add pressure on companies and governments already carrying heavy debt burdens. That leaves major economies facing a sharper policy dilemma. Slower growth, weaker consumption and higher business costs call for policy support, but rising energy prices and renewed inflation limit the scope for monetary easing. After the pandemic and years of high interest rates, many governments have less capacity to offset the energy shock through subsidies or tax cuts.

Shahjalal Khan, a retired school headmaster from the bustling Mohammadpur neighbourhood, had long cherished the dream of securing a modest apartment in Dhaka—a peaceful corner to call his own after decades of service to the nation’s youth. His wife, Rayea Akter, also on the cusp of retirement, shares the same aspiration. But despite their combined savings of Tk75 lakh—accumulated over years of dedication—the dream now seems distant, even elusive. “After the change in government, I no longer feel confident withdrawing our savings to purchase a flat,” Shahjalal told UNB. “My pension, our combined earnings—it all adds up, yet it still falls short. And the registration fees add another 15 percent. It’s simply out of reach," he said. Like many others in Bangladesh’s middle class, Shahjalal finds himself paralysed by economic uncertainty and political instability. The couple, once hopeful, now hesitate to act—fearful of what the future might hold. Stifled Growth in the Face of Crisis The housing sector—once a cornerstone of urban development—is now faltering under the weight of multifaceted challenges. The recent political transition, coupled with an interim government, a rise in construction costs, and unresolved issues surrounding the Detailed Area Plan (DAP), has plunged the real estate industry into a prolonged slump. Besides, the silence from the authorities regarding the continuation of the provision allowing investment of undisclosed income in housing—by paying a 15 percent tax—has cast a shadow over the sector’s short-term future. Buyers and investors, uncertain and wary, are choosing to wait. Hope in Numbers, Not on the Ground Yet amid the turbulence, global projections paint a more hopeful picture. According to market research firm Statista Market Insights, Bangladesh’s housing market is projected to reach US$2.75 trillion by the end of 2025. With an anticipated annual growth rate of 1.99 percent, the market is expected to expand to US$3.07 trillion by 2029. DAP stalling housing sector, threatening economy: REHAB The residential segment alone is forecasted to hit US$2.07 trillion in 2025, climbing to US$2.21 trillion by 2029 at a steady CAGR of 1.63 percent. While China is poised to dominate the global real estate landscape with an astronomical US$115.4 trillion in 2025, Bangladesh’s sector is seen as steadily rising—driven by urbanisation and population growth. Flat Sales in Free Fall Md. Rasel Mukul, Assistant General Manager (Sales & Marketing) at Basic Builders Ltd, offered a sobering reality: flat sales have plummeted—down by 40 percent among middle-income buyers and by as much as 70 percent among the affluent. “Flat bookings have dropped drastically. Even the sale of plots has dwindled,” he told UNB, reflecting the despair of countless small and medium-scale developers struggling to stay afloat. Adding to the crisis is a steep hike in raw material costs. “There are 280 types of materials needed to construct a flat. Prices of some key items, like rods and cement, have soared by 25 percent due to inflation and land costs in DAP-affected areas,” explained Dawn Shahenul Kabir, Director (Construction), Eastern Housing. This cascading cost inflation has effectively halted many new projects, while private home construction has stagnated. The ripple effect is being felt across the supply chain, with plummeting demand for core materials. For the past five months, the flat market has remained frozen, prompting some developers to sell units below cost just to stay solvent. Many are struggling to cover operational expenses—paying staff salaries, managing office overheads—and praying for a turnaround if the economic tide turns. One managing director from a midrange real estate company, requesting anonymity, shared that over 200 flats in their 30-plus projects across Dhaka remain unsold. Prices vary: in Banasree, flats go for Tk5,500–6,000 per square foot; in Bashundhara, Tk7,000–8,500; and in Jalsiri Housing, Tk9,000–9,500. These units range from 1,300 to 2,850 square feet. “Sales in 2025 are already down by 20 percent compared to last year,” said Shahjahan Raihan, Chief Operating Officer of Sheltech (Pvt.) Limited. “Customers are simply not ready to invest amidst the prevailing political and economic uncertainty.” REHAB Blames the DAP: A Sector Under Siege The Real Estate and Housing Association of Bangladesh (REHAB) is sounding the alarm. “After the change in government, many of the key investors—businessmen, bureaucrats, even politicians—have gone quiet,” said Liakat Ali Bhuiyan, REHAB’s senior vice president. “The window to invest undeclared money has closed, cutting off a major flow of capital into the sector," he said. Bangladesh signs $289.52 million loan agreement with IsDB for housing finance project At the heart of the controversy is the Detailed Area Plan (DAP), a blueprint designed by RAJUK to reshape Dhaka into a more liveable city. Enforced since August 2023, the plan has sparked intense debate. Developers argue that the new zoning laws are discriminatory and have crippled the industry. “This DAP is nothing short of a death trap,” Liakat warned. “If not amended, the very industry that fuels employment across the nation is at risk of collapse," he said. A Tug of War Over Dhaka’s Skyline A RAJUK official, preferring anonymity, confirmed that a revised version of the DAP is nearing finalisation and will soon be gazetted following ministerial approval. While REHAB welcomes the revision, urban planners express grave concern. They allege the government is capitulating to business interests at the expense of public welfare. The most contentious changes involve a relaxation of the Floor Area Ratio (FAR), allowing buildings to rise higher than before: Mirpur: from 5 to 7 storeys Uttara Phase III: from 6 to 10 storeys Mohammadpur: from 5 to 7 storeys Bashundhara: from 6 to 8 storeys Gulshan-Banani: from 11 to 12 storeys Besides, water bodies will be categorised solely as such—prohibiting any filling—and agricultural land will be distinctly marked and protected without sub-classifications. Urban Planners Cry Foul Mohammad Fazle Reza Suman, former president of the Bangladesh Institute of Planners (BIP), did not mince words. More than 6,000 abandoned houses are in Dhaka city: Housing Minister “No consultation was held with urban planners or city residents before increasing building heights,” he said. “The authorities are bending to the will of vested interests, sacrificing Dhaka’s livability.” He warned that RAJUK’s apparent vision to turn Dhaka into a city of endless high-rises defies environmental logic and social equity. “If the DAP and building codes must be amended, it should be through a transparent, consultative process. We’ve seen how height regulations were loosened in 2007 and 2008, then reined in again in 2022. Now, further loosening will only intensify population density and overburden the city’s fragile infrastructure,” he added. A City Caught Between Growth and Gridlock As the nation’s real estate sector hangs in limbo, torn between ambition and reality, the future of Dhaka’s urban landscape remains uncertain. Will the city rise, resilient and reimagined? Or will it collapse under the weight of its contradictions—soaring towers above, and faltering trust below?

Eminent economist Dr Ahsan H. Mansur has said that political instability or uncertainty always affects the economy adversely. Dr Mansur, executive director of the Policy Research Institute (PRI), a Dhaka-based think tank,  was talking to UNB on the ongoing political situation centred on the 12th national election and the opposition's hartal-blockade programs. “Bangladesh's macroeconomy is facing challenges not seen in the last 25/30 years, so tackling the grave situation politically is very important,” he said. The political unrest alongside the macroeconomic instability is a double blow for the domestic economy, so the current domestic situation is different from any other election period in the history of Bangladesh, Dr Mansur pointed out. Read: Blockades are bad for economy, scare foreign investors: FBCCI President He said, “If the national election is not credible to the international and domestic people, the concern will grow over what steps and reaction come from western countries, which is the export destination of most Bangladeshi products.” Meanwhile, the foreign countries have expressed concern over a decent working environment for labour, security of labour organisations' leaders, and desired wages in the export-oriented garment industries, he said. Bangladesh's human rights record was reviewed for the fourth time under the Universal Periodic Review (UPR), an important UN human rights mechanism. Bangladesh's human rights record is under the scrutiny of the UN, EU, and USA, in this case, the steps for a political resolution and securing labour rights are very crucial, he opined. Regarding releasing the second instalment of the IMF’s USD $4.70 billion loan, Dr. Mansur, who is also a former senior economist of the IMF, said that there is no reason to delay the second instalment of the loan as Bangladesh met most of the conditions set by the global lender. Read: Economy bears brunt of ongoing blockades and hartals ahead of polls: Dr Atiur Rahman He said double-digit inflation has been prevailing in Bangladesh for a long time, while the South Asian countries including Sri Lank had succeeded in controlling inflation. In this area, Bangladesh has to do more to reduce the inflation rate to 4-5 percent.    He focused on a market-based foreign exchange rate to make the exchange rate sustainable instead of being controlled by the Bangladesh Bank or Bangladesh Foreign Exchange Dealers Association (BAFEDA). Dr. Masur suggested policy reform and effective measures to stop money laundering or capital flight for a sustainable domestic foreign exchange market, in that the central banks have to apply their regulatory authority without bias or influence. “Despite a huge workforce and advantage of geographical location, Bangladesh cannot attract big volume foreign direct investment (FDI) due to lack of policy reforms and weak regulatory authority. Political unrest will work as another barrier for FDI,” he pointed out. Read: An innovation leap: Nagad Digital Bank aims to extend reach to the unbanked and underbanked Regarding political resolution, he said that there is no alternative to dialogue amongst major political parties, and tolerance of opposition for those who are in strong positions or in power is very important. Dr Mansur said all parties' participation in the upcoming election is the best option for Bangladesh in consideration of the overall current situation, while dialogue and level playing field for political parties are important issues. He thinks that the situation is not normal, as what is happening in Bangladesh is being keenly watched around the world, so the authorities must proceed with reason.