How exposed is Bangladesh to a prolonged Saudi crisis?
Why This Matters
Key context: <p>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.</p> <p>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.</p> <p>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.</p> <p>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.</p> <p>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.</p> <p>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.</p> <p>“But everything is uncertain so far,” he commented.</p> <p>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 <a href="https://www.dawn.com/live/iran-israel-war">US-Israel war on Iran</a>, which has sent shockwaves through sectors ranging from agriculture to the garment industry.</p> <p>In the July-September quarter of the current fiscal year, Saudi Arabia remained Bangladesh’s largest source of remittances. Inflows from the kingdom rose to $1.65 billion, up from $1.23bn in the same period of FY26, according to Bangladesh Bank data.</p> <p>The kingdom accounted for 19.2pc of Bangladesh’s total remittance inflows in the first quarter of FY27, compared with 16.26pc a year earlier.</p> <p>During the July-September quarter, overall remittances reached around $8.59bn, with Gulf Cooperation Council (GCC) countries continuing to account for the bulk of transfers.</p> <h2><a id="diversifying-overseas-jobs-is-becoming-urgent" href="#diversifying-overseas-jobs-is-becoming-urgent" class="heading-permalink" aria-hidden="true" tabindex="-1" title="Permalink"></a>Diversifying overseas jobs is becoming urgent</h2> <p>The latest disruption shows Bangladesh’s heavy reliance on a handful of overseas labour markets, leaving migrant workers and the economy exposed to regional crises.</p> <p>Since FY2014-15, Saudi Arabia has employed around half of the 9.6 million Bangladeshis who went abroad for work. Workers in the kingdom have sent home an average of $5bn a year.</p> <p>The pressure on migration is already evident. Overseas employment fell 36pc year-on-year to 134,000 in the July-August period this year, following a decline to around 969,000 workers in FY26, the lowest level in five years, according to Bureau of Manpower, Employment and Training data.</p> <p>Tasneem Siddiqui, executive director of the Refugee and Migratory Movements Research Unit (RMMRU), a local think tank, said the crisis exposed the structural weaknesses of the country’s migration sector.</p> <p>“Therefore, rather than relying on piecemeal decisions, we must completely overhaul and diversify the manpower market. Otherwise, one crisis after another will emerge, leaving us perpetually vulnerable,” said Tasneem, also a political science professor at Dhaka University.</p> <p>She said the government needs a long-term strategy to develop skills suited to specific overseas markets and expand employment opportunities beyond traditional destinations.</p> <p>“Long-term strategic planning is essential. Particularly, allocating a mere 0.08pc of the budget for a $35bn remittance sector is grossly insufficient to accomplish meaningful interventions,” she said.</p> <p>Meanwhile, economist Zahid said Bangladesh should target countries facing ageing populations and labour shortages, including Japan and countries in eastern Europe, where demand for workers in nursing, caregiving and manufacturing could offer alternatives to Middle Eastern markets.</p> <p>Sayema Haque Bidisha, an economics professor at Dhaka University, also called for greater diversification of migration destinations, stronger diplomatic engagement and better support for expatriates through overseas missions.</p> <p>She said Bangladesh needs to improve its international image by demonstrating that its workers can fill skilled jobs, rather than being seen primarily as a source of manual labour.</p> <p>Shariful Hasan, associate director of BRAC’s Migration Programme and Youth Platform, said earlier this month that many Bangladeshi workers in Saudi Arabia depend on daily or weekly employment and that security concerns have reduced work opportunities.</p> <h2><a id="pakistan-faces-greater-exposure-than-india" href="#pakistan-faces-greater-exposure-than-india" class="heading-permalink" aria-hidden="true" tabindex="-1" title="Permalink"></a>Pakistan faces greater exposure than India</h2> <p>Bangladesh is not the only country with a significant reliance on remittances from Saudi Arabia.</p> <figure class='media w-1/2 sm:w-1/3 media--right media--embed media--uneven' data-original-src='https://www.dawn.com/news/2039532'> <div class='media__item media__item--newskitlink '> <iframe class="nk-iframe" width="100%" frameborder="0" scrolling="no" style="height:250px;position:relative" src="https://www.dawn.com/news/card/2039532" sandbox="allow-same-origin allow-scripts allow-popups allow-modals allow-forms"></iframe></div> </figure> <p>Its neighbours <a href="https://www.dawn.com/news/2002214">India</a> and <a href="https://www.dawn.com/news/2036050">Pakistan</a> also depend on money sent home by their citizens working in the kingdom, although the potential impact varies.</p> <p>Saudi Arabia is Pakistan’s largest source of remittances, contributing $9.78 billion in the last fiscal year, according to State Bank of Pakistan data.</p> <p>Meanwhile, around 7pc of India’s international remittance inflows originate from Saudi Arabia. The country receives about $8 billion annually from the kingdom, according to the Reserve Bank of India.</p> <figure class='media w-1/2 sm:w-1/3 media--right media--embed media--uneven' data-original-src='https://www.dawn.com/news/2005032'> <div class='media__item media__item--newskitlink '> <iframe class="nk-iframe" width="100%" frameborder="0" scrolling="no" style="height:250px;position:relative" src="https://www.dawn.com/news/card/2005032" sandbox="allow-same-origin allow-scripts allow-popups allow-modals allow-forms"></iframe></div> </figure> <p>A prolonged crisis that affects employment and earnings in Saudi Arabia could therefore have a greater impact on Pakistan than on India, given Pakistan’s substantial reliance on the kingdom as a source of remittances.</p> This development from dawn.com highlights ongoing changes in the sector.
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 July-September quarter of the current fiscal year, Saudi Arabia remained Bangladesh’s largest source of remittances. Inflows from the kingdom rose to $1.65 billion, up from $1.23bn in the same period of FY26, according to Bangladesh Bank data. The kingdom accounted for 19.2pc of Bangladesh’s total remittance inflows in the first quarter of FY27, compared with 16.26pc a year earlier. During the July-September quarter, overall remittances reached around $8.59bn, with Gulf Cooperation Council (GCC) countries continuing to account for the bulk of transfers. Diversifying overseas jobs is becoming urgent The latest disruption shows Bangladesh’s heavy reliance on a handful of overseas labour markets, leaving migrant workers and the economy exposed to regional crises. Since FY2014-15, Saudi Arabia has employed around half of the 9.6 million Bangladeshis who went abroad for work. Workers in the kingdom have sent home an average of $5bn a year. The pressure on migration is already evident. Overseas employment fell 36pc year-on-year to 134,000 in the July-August period this year, following a decline to around 969,000 workers in FY26, the lowest level in five years, according to Bureau of Manpower, Employment and Training data. Tasneem Siddiqui, executive director of the Refugee and Migratory Movements Research Unit (RMMRU), a local think tank, said the crisis exposed the structural weaknesses of the country’s migration sector. “Therefore, rather than relying on piecemeal decisions, we must completely overhaul and diversify the manpower market. Otherwise, one crisis after another will emerge, leaving us perpetually vulnerable,” said Tasneem, also a political science professor at Dhaka University. She said the government needs a long-term strategy to develop skills suited to specific overseas markets and expand employment opportunities beyond traditional destinations. “Long-term strategic planning is essential. Particularly, allocating a mere 0.08pc of the budget for a $35bn remittance sector is grossly insufficient to accomplish meaningful interventions,” she said. Meanwhile, economist Zahid said Bangladesh should target countries facing ageing populations and labour shortages, including Japan and countries in eastern Europe, where demand for workers in nursing, caregiving and manufacturing could offer alternatives to Middle Eastern markets. Sayema Haque Bidisha, an economics professor at Dhaka University, also called for greater diversification of migration destinations, stronger diplomatic engagement and better support for expatriates through overseas missions. She said Bangladesh needs to improve its international image by demonstrating that its workers can fill skilled jobs, rather than being seen primarily as a source of manual labour. Shariful Hasan, associate director of BRAC’s Migration Programme and Youth Platform, said earlier this month that many Bangladeshi workers in Saudi Arabia depend on daily or weekly employment and that security concerns have reduced work opportunities. Pakistan faces greater exposure than India Bangladesh is not the only country with a significant reliance on remittances from Saudi Arabia. Its neighbours India and Pakistan also depend on money sent home by their citizens working in the kingdom, although the potential impact varies. Saudi Arabia is Pakistan’s largest source of remittances, contributing $9.78 billion in the last fiscal year, according to State Bank of Pakistan data. Meanwhile, around 7pc of India’s international remittance inflows originate from Saudi Arabia. The country receives about $8 billion annually from the kingdom, according to the Reserve Bank of India. A prolonged crisis that affects employment and earnings in Saudi Arabia could therefore have a greater impact on Pakistan than on India, given Pakistan’s substantial reliance on the kingdom as a source of remittances.
Curation & Context
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