Energy Crisis Could Impact Bangladesh and Pakistan's Recovery

South Asian Nations Face Energy Crisis Risks Amid Middle East Conflict​

New Delhi, March 30 – The ongoing Middle East crisis presents a heightened risk to Bangladesh, Pakistan, and Sri Lanka, among South Asian nations, according to a report by S&P Global Ratings. The report highlights the countries’ vulnerability due to their heavy reliance on imported energy and limited reserve supplies.

S&P Global Ratings, a provider of analyst-driven credit ratings, research, and sustainable finance opinions, indicates that a prolonged price and supply shock in global energy markets could negatively impact the sovereign credit ratings of these countries.

Pakistan, Sri Lanka, and Bangladesh are currently showing signs of economic recovery. However, sustained high energy prices and potential disruptions to trade and remittances could destabilize their economies. The report notes that Laos is comparatively less exposed due to its reliance on hydropower generation and a more balanced fiscal position.

“Our ratings on Bangladesh can likely withstand the short-term economic disruptions associated with our base-case scenario,” S&P Global Ratings stated.

However, Bangladesh faces mounting risks to growth, inflation, and its external balance if rising energy prices persist. Higher fuel costs are expected to stall the decline in inflation over the next three to six months and could weaken the country's economic recovery.

Bangladesh’s economy is almost entirely reliant on imports for crude and refined oil products. Its oil reserves are projected to last less than one month, potentially leading to more stringent consumption curbs if imports remain constrained. Approximately 50 per cent of Bangladesh’s electricity generation is gas-fired, with nearly a quarter of its gas demand met through imports.

The country is already dealing with persistently high inflation, which reached 9.2 per cent in February, up from 8.6 per cent in January, alongside a slowdown in growth following the collapse of the previous government in mid-2024. Bangladesh’s revenue-to-GDP ratio is among the lowest of all rated sovereigns, estimated at around 9 per cent for the current fiscal year ending June 2026.

As of March 12, 2026, Bangladesh’s foreign exchange reserves stood at $29.6 billion, a significant increase from $19.7 billion during the same period in 2025.