Inflation in the euro zone’s four largest economies hovered ​above the European Central Bank’s 2 percent target for a third straight month in May, preliminary data showed ‌on Friday, as a rise in fuel costs triggered by the Iran war began to feed through to other prices.

Readings from France, Italy, Spain and Germany are likely to cement the case for a rate hike from the European Central Bank next month and stoke some worries about whether high inflation ​is beginning to take root in the euro zone.

Both Spain and Italy reported strong increases in the ​price of transport and entertainment activities, a likely sign of the knock-on effect of higher fuel costs. Measures of underlying inflation rose both in Italy, to 1.8 percent from 1.6 percent, and in Spain, to 2.9 percent ​from 2.8 percent. France saw a 4.1 percent jump in the cost of fresh food and a slight increase in services inflation.

“We ​are not at the peak yet,” said Nadia Gharbi, a senior economist at Pictet Wealth Management, who expects euro zone inflation to rise until August. “A lot will depend on the situation in the Middle East and we have as a baseline that the situation will ​normalise by the end of June.”

Hopes of a deal to end the war between the United States and Iran ​have pushed oil prices down substantially since the end of April, with a barrel of Brent crude selling for $92 versus $118 back then. Still, ‌prices remain well above the around $70 a barrel level seen just before the war.

A RELATIVELY MILD INFLATION WAVE

Headline inflation was more of a mixed bag. National gauges of price growth rose in France, to 2.8 percent from 2.5 percent, and in Italy, to 3.2 percent from 2.7 percent, but remained stable in Spain at 3.2 percent and fell to 2.6 percent from 2.9 percent in Germany, which implemented ​a fuel discount for May ​and June as part of a package to cushion the impact of higher petrol prices.

“Today’s inflation numbers should not be read as a sign that the inflation wave is already over before it actually started ​but rather as a confirmation that this is a relatively mild inflation wave,” said ​ING’s economist Carsten Brzeski.

All three indexes posted both weekly and monthly gains, with the S&P 500 recording its ninth straight weekly gain, it’s longest streak since December of 2023. Euro zone-wide data due on Tuesday is expected to put headline inflation at 3.3 percent in May, with a core gauge excluding energy, food, alcohol and tobacco at 2.4 percent.

“This information so far hints at a further rise in headline inflation, and some increase in ​core inflation,” JPMorgan economist Raphael Brun-Aguerre said in a note.

France continued ​to see deflation in manufacturing prices, strengthening the view that the current inflation shock should be smaller than the one that followed the Covid pandemic ​and Russia’s invasion of Ukraine in 2022, according to Bersingeco economist Sylvain Bersinger.

Sri Lanka raised fuel prices by up to six percent on Sunday, in line with IMF plans to recover energy costs and phase out subsidies to stabilise the economy.

Petrol was raised to 434 rupees ($1.33), up from 410, while diesel increased to 407 rupees a litre from 392, the state-run Ceylon Petroleum Corporation said.

The price hike came days after the International Monetary Fund released a $695 million instalment of a $2.9 billion bailout loan, agreed in early 2023 to stabilise the cash-strapped South Asian nation.

The IMF wants Sri Lanka to ensure cost recovery for both fuel and electricity tariffs, which have been subsidised by the government since the start of the conflict in the Middle East in February.

President Anura Kumara Dissanayake, in a letter to the IMF made public by the Washington-based international lender, said fuel subsidies will be phased out by September.

Since the United States and Israel began attacking Iran on February 28, triggering a global energy crisis, Sri Lanka has raised petrol and diesel prices by about 48 percent. Electricity has increased by a third.

The Strait of Hormuz, a key waterway through which about 20 percent of global oil exports pass in peacetime, has been effectively closed by Iran.

Sri Lanka imports all its oil and also buys coal for electricity generation.

Colombo has warned that the fighting in the Middle East, and any prolonged conflict, could seriously undermine its efforts to emerge from the economic meltdown of 2022.

Sri Lanka defaulted on its $46 billion foreign debt in 2022 after running out of foreign exchange. Since then, Colombo has been drawing down the IMF bailout loan to stabilise the country.

Trading and official activities on the country’s two stock exchanges—the Dhaka Stock Exchange (DSE) and Chittagong Stock Exchange (CSE)—will resume tomorrow (Monday) after a week-long Eid-ul-Azha holiday.

The bourses remained closed from May 25 to May 31, including weekly holidays, on the occasion of Eid-ul-Azha, one of the largest religious festivals for Muslims.

Trading hours will return to the regular schedule, beginning at 10:00 am and continuing until 2:30 pm, including a 10-minute post-closing session, according to DSE officials.

Before the Eid break, the market ended slightly higher on May 24 as bargain hunters picked up undervalued blue-chip stocks, although overall investor sentiment remained cautious.

The benchmark DSEX index gained 7.5 points, or 0.14 per cent, to close at 5,336.

The DSE30 Index, comprising blue-chip stocks, edged up 0.54 points to 2,030, while the DSE Shariah Index (DSES) advanced 5 points to 1,082.

The Chittagong Stock Exchange also closed in positive territory on the final trading day before the holiday. The CSE All Share Price Index (CASPI) rose 71 points to 14,909, while the Selective Categories Index (CSCX) gained 38 points to finish at 9,169.

Bangladesh Finance made a significant turnaround by securing a profit of Tk 225 million in 2025 from one of the highest losses - Tk 7.83 billion - in the country's non-bank financial institution (NBFI) sector a year earlier.

The achievement was mainly driven by strong recoveries from stressed loans, said Md. Kyser Hamid, managing director and CEO of the company.

The company recovered around Tk 1.77 billion in 2025 from stressed loans, he said, adding that loan rescheduling and lower provisions also contributed to the latest financial performance.

A year ago, Bangladesh Finance set aside money to maintain full provisions against defaulted loans and even stressed loans.

"Usually, provision is kept only for non-performing loans, but we allocated additional interest suspense and provisions against stressed loans in the past two years."

If any client fails to pay loan instalments for more than three consecutive months, their account gets suspended and the pending interest is not shown as income.

Bangladesh Finance kept provisions against investments of Tk 1.66 billion in 2023 and Tk 8.36 billion in 2024.

The CEO said the management had set aside more than what was necessary as interest suspense and kept higher provisions than required in 2023 and 2024, considering that the company might have to bear further financial shocks in the future.

These measures were taken to mitigate unforeseen credit risks, address potential losses early, prevent further deterioration and defaults, ensure adequate reserves, and safeguard overall financial health, he said.

With such precautionary measures already in place, aggressive efforts in 2025 to recover and reschedule defaulted loans enabled the company to reverse a substantial amount of provisions previously maintained.

Echoing Mr Hamid, Md. Sajjadur Rahman Bhuiyan, group chief financial officer, explained that after facing heavy provisioning in FY24, the company strategically focused on recovery in FY25.

"By deploying management to accelerate settlements and rescheduling major corporate loans, we successfully released substantial provisions, ultimately driving the company back to profitability."

Bangladesh Finance booked a provision write-back of Tk 2.13 billion, a dramatic reversal from the Tk 7.85 billion provision recorded in 2024, according to its auditor's opinion published on Sunday.Regional business directory

"The write-back significantly boosted the company's bottom line and marked a major improvement in asset quality management," said the auditor.

Mr Hamid said continued recovery initiatives, disciplined risk management and supportive regulatory policies were expected to further improve the company's financial health and support sustainable long-term growth.

However, the auditor warned that Bangladesh Finance still faces serious financial vulnerabilities.

It pointed out that the company continued to operate with negative consolidated equity of Tk 5.47 billion as of December 2025.

The auditor noted that the financial statements had nevertheless been prepared on a going concern basis after the management provided justification that the company would be able to continue operations in the foreseeable future.

Bangladesh Finance said its management conducted a detailed assessment in line with Bangladesh Bank guidelines and International Accounting Standard (IAS) 1 to evaluate whether the company could continue as a going concern.

The assessment considered financial performance, liquidity conditions, asset quality and capital structure.

According to the company, its board believes the institution has adequate resources and recovery plans in place to continue operations despite the negative capital position.Wealth management advice

The company also highlighted a sharp improvement in its provision coverage ratio, which rose to 496.96 per cent at the end of 2025, indicating a strong cushion against potential future credit losses.

Capital adequacy indicators also improved during the year, although they remained below regulatory requirements.

The standalone capital adequacy ratio improved to negative 31.84 per cent from negative 33.81 per cent a year earlier, while the consolidated capital adequacy ratio stood at negative 24.29 per cent.

Meanwhile, net asset value per share also showed signs of recovery. Consolidated NAV per share improved to negative Tk 28.85 in 2025 from negative Tk 30.05 in the previous year.

To restore financial stability, the company has prepared a long-term capital management plan along with a seven-year financial projection and a liquidity management strategy aimed at rebuilding capital strength and improving liquidity conditions, said the auditor.

The management acknowledged that confidence in the financial sector remains weak but said ongoing restructuring initiatives and expected regulatory support would help stabilise the company further.

The auditor also confirmed that subsidiaries - Bangladesh Finance Securities and Bangladesh Finance Capital - received unmodified audit opinions for 2025.

Recovery continues in Q1, 2026

Bangladesh Finance sustained its recovery momentum in the first quarter of 2026, posting a 120 per cent year-on-year increase in consolidated profit to Tk 20.71 million.

The company said the performance in the January-March period resulted from capital gains from investments in securities and further reversal of provisions maintained against loans, leases and investments.

It has sustained its recovery at a time when the sector overall has been under pressure from rising non-performing loans, liquidity stress and weakening depositor confidence over the past several years.

Predictable policies, improving liquidity flows and rebuilding investor confidence dominates the upcoming national budget as Bangladesh navigates a challenging economic landscape marked by inflation, sluggish investment and financial-sector vulnerabilities.

Talking to The Financial Express, days before the new government's maiden budget lands in parliament, Dr Rashed Al Titumir also explains that the government's economic strategy is built around a five-year framework of "recovery, restoration and reconstruction for acceleration".

"The budget size remains relatively small compared to the size of our economy and the financing needs in health and education," he says, stressing the need to increase public spending to reduce high out-of-pocket healthcare expenditures and build a skilled workforce through the promotion of technical education.

Asked about amendments to the Bank Resolution Act and efforts to address the banking-sector crisis, Dr Titumir says the government has adopted a diversified approach and is seeking strategic international partners to strengthen financial institutions.

"Bangladesh must better integrate with international banking standards and explore opportunities in the global Islamic finance market to benefit depositors, trade financiers and the broader economy."Digital news subscription

The government is also focusing on improving liquidity flows within the financial system.

"We must ensure the flow of liquidity. This requires proper incentives to increase the velocity of money. Banks holding excess liquidity should play a greater role in supporting productive investment," he says.

While acknowledging the current stagflationary pressures, the professor of development economics emphasizes that the government is pursuing economic correction rather than financial repression.

"We do not want financial repression. Our objective is to correct distortions and ensure that investors have access to funds without facing excessive financing costs."

Dr Titumir stresses coordination between fiscal and monetary policies while maintaining the operational independence of the central bank, free from political intervention.

On relations with the IMF, he says Bangladesh would continue discussions with the Fund to ensure that future policy commitments reflect the country's economic realities.

Describing the previous Hasina administration as "debtholic," he argues that the government had accepted several IMF conditions under the bailout programme that may not fully align with Bangladesh's current economic context.Bangladesh investment guides

"We will continue negotiations based on our own policy priorities and development needs."

Emphasizing the urgency of restoring international confidence as a prime objective, he notes that Bangladesh's debt-risk rating by the IMF from low to medium was a "hemorrhage" for the country's ability to access concessional financing.

"Lower international ratings affect investment, financing costs and market access. Consistent policies, macroeconomic stability and stronger institutions are essential for rebuilding credibility."

The government is also seeking to position Bangladesh as a regional logistics and connectivity hub by attracting internationally reputed port and logistics operators.

"We want to build Bangladesh into a logistics hub and create a benchmark that attracts internationally reputed operators through an inclusive and competitive process."

He says the government has already initiated investment discussions with stakeholders from Singapore, Saudi Arabia, the UAE, Denmark and Japan, particularly regarding opportunities around the Chattogram Economic Corridor.

Projects may be implemented through public-private partnerships, although other investment models are also being explored to ensure trade and economic benefits for Bangladesh.Development strategy reports

Dr Titumir highlights the importance of multimodal transport systems and stronger regional connectivity with Nepal, Bhutan, China, Myanmar and ASEAN economies.

Regarding state-owned enterprises, he says public resources should be concentrated on essential public services such as education, healthcare and social protection.

The government is considering leasing closed factories under BJMC and BTMC through a transparent and competitive process, he adds.

The adviser strikes a note of optimism about restoring confidence in Bangladesh's capital market, noting that BNP-led governments had not experienced major stock- market scams.

"Investors have repeatedly suffered from market manipulation and weak enforcement. Restoring trust requires stronger governance and regulatory oversight," he says.

On evolving trade issues with the United States, Dr Titumir says Bangladesh remains committed to respecting international agreements while continuing consultations to protect its national interests.

"The US situation is evolving too as tariff issues go to Supreme Court."Currency exchange tools

There are issues that require consultation and dialogue.

Despite current challenges, Dr Titumir remains cautiously optimistic about Bangladesh's prospects.

"We are pursuing a strategy of recovery, restoration and reconstruction. With policy consistency, institutional reforms and renewed confidence, Bangladesh can unlock its growth potential and strengthen its position in the regional economy," he says.

Bangladesh's import policy in the making appears at odds with emerging trade requirements in the European Union and the United States as it proposes allowing apparel exporters to qualify for incentives with a minimum 30-percent local value addition.

Industry leaders say the EU's proposed Generalised Scheme of Preferences Plus (GSP+) framework will require "double transformation" for garment exports, which they estimate would translate into around 40-percent local value addition.Local trade insights

Similarly, exporters say recent US trade rules require at least 40-percent local value addition, failing which shipments could be treated as transshipments.

To qualify for the EU's proposed GSP+ framework, Bangladeshi garment exporters will need to comply with the double-transformation requirement, which industry leaders estimate would require around 40-percent local value addition - a level already achieved by many knitwear manufacturers, though.

However, woven-garment manufacturers, which typically have lower domestic value addition, may find it more difficult to retain duty-free access to the EU market following Bangladesh's graduation from least-developed-country (LDC) status in November 2026, according to trade economists and industry insiders.

The government, however, has also sought a deferral of the country's graduation process to leave the world's poor-country club.

"We proposed lowering the threshold to 20 per cent," says BKMEA President Mohammad Hatem, in reference to the draft Import Policy Order 2026-2029.

He argues that high-value products, particularly those made from man-made fibres (MMF), would struggle to meet the proposed 30-percent threshold, as raw material costs for such products are significantly higher than those of cotton-based items.Capital market software

"If the government does not revise the provision, it will discourage local industrialisation and efforts to increase domestic value addition in export-oriented apparel production," he predicts.

Hatem also raises concern over a proposed restriction on knit fabrics import in the draft policy. Referring to Commerce Ministry Additional Secretary Abdur Rahim Khan, he says the ministry had indicated that the issue would be addressed in the final version of the policy.

A recent Ministry of Commerce document states that following Bangladesh's graduation from the LDC status, exports to key destinations such as the EU, the United Kingdom, the United States, Japan and other markets will no longer enjoy duty-free access.

To maintain export competitiveness and safeguard market share, the ministry, in collaboration with stakeholders, has already initiated negotiations on free-trade agreements (FTAs), comprehensive economic partnership agreements (CEPAs), bilateral and multilateral trade agreements, and other preferential trade arrangements with major trading partners.

According to the document, maintaining duty-free market access after graduation will require major export-oriented sectors to raise local value addition to above 40-50 per cent. In some cases, compliance with product-specific rules (PSRs), including double-transformation requirements, will be necessary.

The policy on the anvil further notes eligibility for GSP+ preferences may require a minimum value addition of 40 per cent. Exports to countries such as Australia and Canada, which currently enjoy duty-free access, are already required to meet a value-addition threshold of at least 50 per cent.

"In nearly all recent trade negotiations, the requirement for double transformation as a condition for granting duty-free access to Bangladeshi exports has been strongly emphasised," the document reads.Economic trend data

It also highlights that Bangladesh has offered commitments in ongoing negotiations under which garments produced using yarn and fabrics originating from importing countries would be eligible for preferential tariff treatment in proportion to the share of such inputs used in production.

"Accordingly, if Bangladesh's garment industry, particularly knitwear manufacturers, becomes increasingly dependent on imported yarn, securing duty-free market access in the future may become significantly more challenging," the document forewarns.

Seeking anonymity, an apparel-sector leader says the government may consider cash support only for new product categories with 20-percent value addition, which could help diversify export offerings.

"The new items could include sportswear, wedding wear and tech wear, which may require imported fabrics and accessories. Once we start producing such products, the local industry will gradually develop around them," the exporter says.

BKMEA Executive President Fazlee Shamim Ehsan mentions that a recent US court decision put the implementation of the reciprocal-tariff policy on hold, meaning it is currently not applicable to Bangladesh or other countries.Local trade insights

According to the draft Import Policy Order, RMG exporters will be required to maintain a 30-percent value-addition threshold for children's garments, up from the current 15 per cent.

Knitwear and woven garment exports will also be required to attain 30-percent value addition, compared to the existing requirement of 20 per cent.

Exporters of underwear and other specialised garments made from synthetic fibres may face a minimum 40-percent value-addition requirement. Footwear exports, including both leather and non-leather products, may be subject to 30-percent threshold, while ship exports could face 40 per cent, and wooden furniture exporters 50 per cent.

Under the proposed policy, exporters who fail to meet the prescribed value-addition requirements will not be eligible for cash incentives or duty benefits on imported raw materials.

The Ministry of Commerce held a stakeholder consultation on the draft policy on May 22, bringing together industry representatives ahead of its finalisation.

An incremental assistance package announced by the Asian Development Bank (ADB) would fetch Bangladesh US$5.0 billion over next five years and increase the subsequent annual aid by 20 per cent.

The announcement came Monday when ADB President Masato Kanda met Prime Minister Tarique Rahman in Dhaka discussing Bangladesh's development priorities.

Such a bounteous financing commitment comes while the release of remaining sums from an as-much IMF lending package for the country stalls under conditions the new government feels unpalatable in the current context. City & Local Guides

The Integrated Growth Network Development Initiative presented by Mr. Kanda during his visit is designed to expand investment, create jobs, improve connectivity, and promote more balanced regional growth.

"The five-year package is expected to amount to about $1.0 billion a year and will be strategically integrated into ADB's enhanced annual sovereign commitment envelope for Bangladesh," the ADB Dhaka office says in a statement.

And the Manila-based development financier plans to increase its annual sovereign commitments for Bangladesh by 20 per cent from about $2.0 billion to about $2.4 billion annually over the medium term.

The higher annual envelope is hoped to support Bangladesh's development priorities, including investment-led growth, job creation, economic diversification, stronger governance, and a smooth transition from least-developed country (LDC) status.

The ADB president says: "Bangladesh is entering a critical new phase. ADB will help the country protect hard-won stability, unlock new sources of growth, and build a more diversified and resilient economy that delivers better jobs and wider opportunity."Wealth management advice

Marking Masato Kanda's visit, the ADB signed about $1.4 billion in loans as part of the 2026 annual-commitment programme.

The Asian Bank support is scaled up by $250 million to help in financing gaps linked to the economic impact of the Middle East conflict, which is adding pressure to Bangladesh's economy by way of driving up the cost of fuels, liquefied natural gas, fertilisers, and shipping.

These strains come as inflation remains high and the banking sector remains under stress.

The ADB will work with the government and development partners to track the situation and bring in additional financing and private investment, and help Bangladesh build a more resilient economy through more diverse energy sources and exports, and stronger institutions.

Also will it provide $2.0 million in technical assistance to support the preparation and implementation of Bangladesh's medium-term development framework and align ADB's forthcoming country-partnership strategy with government priorities.

Mr. Kanda also met Finance and Planning Minister Amir Khosru Mahmud Chowdhury, with discussions focused on Bangladesh's reform agenda, macroeconomic pressures, external- financing needs, and ADB's support for government's growth and resilience priorities.Local trade insights

The ADB chief met with key private-sector leaders discussing the opportunities and constraints shaping investment.

Also, the Bank is working with the government to mobilise additional private capital by deepening capital markets, preparing bankable projects, and attracting cofinancing and private investment.

The ADB is a leading multilateral development bank supporting sustainable, inclusive, and resilient growth across Asia and the Pacific.

Working with its members and partners to solve complex challenges together, the Asian Bank harnesses innovative financial tools and strategic partnerships to transform lives, build quality infrastructure, and safeguard the planet.

India has scrapped customs duties on cotton imports for five months, the government said on Saturday, as it seeks to boost supplies of contamination-free natural fibre for textile exporters amid strong overseas demand for yarn.

The easing of import restrictions by the world’s second-largest cotton producer is likely to lend support to global prices but is unlikely to trigger a surge in purchases as the rupee’s depreciation has made imported cotton slightly more expensive than domestic supplies.The current 11 percent import duty will be suspended until October 30, the government said in a statement.

India’s textile sector, like others, is under pressure from rising input costs as supply chains are disrupted by the Iran war.The measure is expected to support domestic producers, particularly small and medium-sized firms, by improving cotton availability, the government said.

However, industry officials said Indian cotton is currently the cheapest in the world and that ample supplies from this year’s crop are available domestically, which is likely to limit imports.

“At current price levels, imports are not economically attractive,” Vinay Kotak, president of the Cotton Association of India, told Reuters.“Export-oriented mills need contamination-free cotton and, to meet that requirement, around 600,000 bales could be imported during the duty-free import window.”

The cotton is likely to be sourced from Australia, Brazil, the United States and Africa, which have surpluses, industry officials said.India last year allowed duty-free cotton imports from mid-August through the end of December, helping drive imports to a record 4.7 million bales in the current marketing year, which began last October 1.Cotton is largely grown in rain-fed areas in India, and any disruption to monsoon rains from an El Nino weather pattern could reduce output from the new crop being planted from June and boost import demand, said a New-Delhi-based dealer with a global trade house. “In that scenario, the government could extend the duty-free import window beyond October, as it did last year,” he said.

Canada’s economy posted a surprise contraction in the first quarter versus the year before, making it two straight ‌quarters of annualised decline - which some economists call a technical recession - as the country struggles with US tariff uncertainty.

Gross domestic product declined at an annualised rate of 0.1 percent in the first quarter, Statistics Canada said on Friday, compared with a downwardly revised contraction of 1 percent in the fourth quarter of last year.

Analysts ​polled by Reuters and the Bank of Canada had predicted first-quarter growth of a robust 1.5 percent. On a quarterly basis, ​first-quarter GDP was unchanged against a decline in the fourth quarter of last year.

Canada’s economy has largely withstood trade uncertainty and tariff impacts for more than a year, but the knock-on effects of tariffs have sapped investments, hiring and ​expenditure, and driven up prices.

The upcoming review of the North American free trade deal and the crude price ​shock due to the Middle East war have added more layers of uncertainty.

The last two times Canada was in a technical recession were during the start of the pandemic in 2020 and during the oil shock in the beginning of 2015.

At that time there were two consecutive quarters of decline, both on ​an annualized basis and quarterly basis, StatsCan said. Economists were divided on whether Canada is in a recession or not.

“The trade-induced contraction in ​GDP last quarter meant the economy tipped into a technical recession at the start of the year,” said a note from Capital Economics, though rising ‌oil and gas activity mean the economy likely rebounded in April.

Randall Bartlett, deputy chief economist with Desjardins Group, said the group is not prepared to call the data a recession as the weakness in the Canadian economy was not widespread.

BANK OF CANADA SEES GROWTH OF 1.2% THIS YEAR

The BoC has said growth this year is likely to be at 1.2 percent, down from 1.7 percent last year. It will update its projections in ​July.

The first-quarter GDP was negatively ​impacted by a high level ⁠of imports into the country, but that was largely offset by a high accumulation of inventories, the statistics agency said.

Household spending grew, especially in financial services and food, but this was again mostly canceled ​out by a decline in business and government investments.

Business capital investment fell 0.7 percent, its fifth consecutive ​quarterly decline, StatsCan said.

On ⁠a monthly basis, GDP in March declined by 0.1 percent, against an estimate of flat growth.

An advance estimate from StatsCan showed that growth in April was likely to be 0.4 percent, highlighting a strong start to the second quarter.

Money markets are pricing in a rate hike of 25 basis ⁠points in ​December, even as most economists have called for no change in interest rates all ​through the year.

The Canadian dollar weakened after the GDP data and was trading down 0.28 percent to C$1.3819 to the US dollar, or 72.36 US cents. Yields on the ​two-year government bonds slipped further and were down 7.7 basis points at 2.430 percent.

The world risks facing a deeper food security crisis in 2026 and 2027 unless governments act quickly to cushion the impact of disruptions in the Strait of Hormuz, the head of the Food and Agriculture Organization (FAO) has warned.

“The decisions we make now will determine whether this remains a manageable shock, or evolves into a deeper global food security crisis in 2026 and 2027, and beyond,” FAO Director-General Qu Dongyu said at a special event on the Middle East crisis during Rome Nutrition Week in Italy from May 25 to May 28.

Describing the situation as “a systemic shock to the global agrifood system”, he said the biggest impacts may emerge months from now as farmers cut back on planting and fertiliser use because of rising production costs and supply chain constraints.

According to the FAO, severe disruptions in the Strait of Hormuz have already affected the movement of oil, liquefied natural gas, sulfur and fertilisers, driving up agricultural input costs and putting upward pressure on seed prices because of their dependence on fertilisers. As energy prices rise, agrifood systems become more expensive across all regions.

Input import-dependent countries, in particular, are facing rising bills, while vulnerable households are losing purchasing power as inflation erodes incomes, the UN agency said.

For many countries, especially in Africa and parts of Asia, these impacts are not occurring in isolation. They are compounding existing pressures from debt distress, climate shocks, conflict and constrained public finances.

Bangladesh meets most of its fertiliser requirements through imports, and Gulf nations such as Saudi Arabia and the United Arab Emirates are major suppliers.

In the fiscal year 2023-24, the country’s demand for urea was 27 lakh tonnes, of which more than 17 lakh tonnes had to be imported, according to Bangladesh Chemical Industries Corporation data.

As global prices of fuel and fertiliser -- especially urea -- have risen, Bangladesh is already feeling the strain.

The FAO chief said the actions taken now will be critical in determining whether the world can manage the shock caused by the situation in the Strait of Hormuz or face a far more serious food security crisis in the years to come.

“We must act early before humanitarian and economic costs rise,” the director-general said.

The warning comes days after the FAO cautioned that the closure of the strategic waterway could trigger a severe global food price crisis within six to 12 months if preventive measures are not taken.

FAO Chief Economist Maximo Torero earlier said the situation should not be seen as a temporary shipping problem but as the beginning of a broader agrifood shock that could spread through global food systems via higher energy costs, fertiliser shortages, lower crop yields and food inflation.

The impact is already visible. The FAO Food Price Index, which tracks monthly changes in the international prices of a basket of globally traded food commodities, rose for a third consecutive month in April, driven by high energy costs and turmoil linked to the conflict in the Middle East.

To reduce the risks, the FAO urged countries to avoid export restrictions on fertilisers and agricultural inputs, support farmers through focused assistance and ensure timely financing for food production.

The UN agency also called for greater diversification of trade routes, stronger regional integration, strategic reserves and more resilient agrifood systems to reduce dependence on critical trade chokepoints.

The FAO has warned that the situation could become even more challenging if a strong El Niño event materialises, disrupting rainfall patterns and agricultural production in several regions.

“We have a window to act, but that window is narrowing,” Qu said.

The FAO said traditional emergency packages centred exclusively on fertiliser-intensive systems may no longer be viable under current conditions.

“Countries should support adaptive strategies such as intercropping, improving nitrogen efficiency and promoting crops that are less dependent on synthetic fertilisers.”

It suggested prioritised support, saying resources should be directed towards the most vulnerable populations through well-designed social protection systems and rural support mechanisms.

The government has raised the retail price of octane, petrol and kerosene prices by Tk5 per litre for June though diesel price remain unchanged.

The energy division said the June price was adjusted in line with the international oil market movements.

According to a notification issued by the Energy and Mineral Resources Division on sunday, the price of octane has been set at Tk145 per litre effective from 1 June, up from Tk140 per litre in the previous month.

Petrol prices have also been increased by Tk5 per litre to Tk140, while kerosene has risen by the same amount to Tk135 per litre.

However, the price of diesel, the country's most consumed fuel, has been retained at Tk115 per litre.

The government said the revised rates were determined in line with changes in global petroleum product prices.

Under the new pricing structure, octane remains the most expensive fuel in the domestic market, costing Tk5 more than petrol and Tk30 more than diesel.

The latest increase marks the first upward adjustment oil prices in recent months.

The revised fuel prices will come into effect from Monday (1 June).

The International Monetary Fund (IMF) has said that the Bangladesh government has requested a new IMF-supported programme as discussions continue over the country’s reform agenda and policy priorities.

In a statement, IMF Mission Chief for Bangladesh Ivo Krznar said the IMF staff are currently engaged in talks with the Bangladeshi authorities regarding the proposed programme.

“The Bangladeshi authorities have requested a new IMF-supported programme. IMF staff are in discussions with the authorities on their reform agenda and policy priorities,” he said.

Krznar said the IMF remains committed to supporting Bangladesh in maintaining macroeconomic and financial stability amid ongoing economic challenges.

“The IMF remains a committed partner to Bangladesh in its efforts to secure lasting macroeconomic and financial stability, strengthen resilience, and support strong, inclusive growth,” he added.

The development comes as Bangladesh continues efforts to stabilise its economy through fiscal, monetary and structural reforms while addressing pressure on foreign exchange reserves, inflation and the financial sector.

Bangladesh has been implementing various reform measures under its existing IMF loan programme approved in 2023.

Bangladesh is expected to play a significant role in a new US initiative aimed at boosting American cotton exports, as the Trump administration links potential tariff benefits for Bangladeshi apparel exports to the use of US cotton and textile inputs.
The United States Department of Agriculture (USDA) last week launched the Great American Cotton Plan to revitalise the cotton farm economy in the US.
“USDA and USTR secured commitments from Indonesia and Bangladesh that will support future US cotton purchases and textile production using American cotton,” the plan states.

Under the plan, Bangladesh could receive tariff reductions on apparel produced using US cotton and textile inputs, alongside other tariff-related concessions.
A Bangladesh-US reciprocal trade agreement signed on February 9 commits Washington to establishing a mechanism allowing certain Bangladeshi textile and apparel goods to enter the US at a zero reciprocal tariff rate.

However, the volume eligible for this benefit will be tied to Bangladesh’s imports of US-produced cotton and man-made fibre inputs. The US has yet to clarify the textile clause of the deal.Showkat Aziz Russell, president of Bangladesh Textile Mills Association (BTMA), said American cotton’s share of Bangladesh’s nearly $4.0 billion annual cotton import bill has been growing steadily, with local spinners, millers, and traders increasingly turning to US suppliers. He has already held talks with senior US officials on the bilateral cotton trade.
Russell flagged two key obstacles to scaling up US cotton use: the Rules of Origin (RoO) requirements and the long shipping distance between the two countries.He noted that while American cotton offers superior quality, greater clarity is needed on the tariff benefits available to Bangladeshi exporters.

During discussions with US officials, Russell sought clarification on the RoO requirements governing the use of US cotton and man-made fibre in garments eligible for tariff concessions.Based on discussions with US officials, he said the reduced tariff facility may apply only to a specified quota rather than all exports.Russell also stressed the need for warehouse facilities in Bangladesh to store and market US cotton. Imports from neighbouring countries require much shorter lead times, while shipments from the US can take more than 45 days, potentially affecting exporters’ competitiveness.Faisal Samad, a director of the Bangladesh Garment Manufacturers and Exporters Association (BGMEA), said the association will meet officials from the US Embassy in Dhaka next week to discuss the RoO requirements for garments made from US cotton and man-made fibre.

BGMEA leaders had previously sought clarification on the issue during meetings with visiting US Trade Representative (USTR) officials, but were told that work on the framework was still underway.

The US currently accounts for nearly 9 percent of Bangladesh’s annual cotton imports, which are valued at nearly $4.0 billion.US goods trade with Bangladesh totalled an estimated $11.8 billion in 2025.

American imports from Bangladesh reached $9.5 billion -- up 13.3 percent from 2024 -- while US exports to Bangladesh were $2.3 billion.The resulting trade deficit stood at $7.1 billion, a 17.9 percent increase from the previous year. Garments account for 86 percent of Bangladesh’s exports to the US.

The National Board of Revenue is considering raising the specific tax – a form of value-added tax (VAT) – on mild steel (MS) products and related items by around 10% at the production stage, according to sources at the Ministry of Finance.

The proposed change may be included in the Finance Bill accompanying the upcoming national budget. A similar increase in the specific tax on these products was introduced in the previous budget as well.

Industry stakeholders have warned that any further tax hike could dampen demand at a time when the steel sector is already struggling with weak market conditions. They said economic slowdown has reduced infrastructure and construction activities across government, private and individual projects, leading to a sharp fall in demand for steel rods.

Infograph: TBS
Infograph: TBS

According to sources at the NBR, the specific tax on MS products manufactured from re-rollable scrap currently stands at Tk1,700 per tonne, which may be increased by Tk170.

The specific tax on billets and ingots produced from meltable scrap may rise by Tk150 from the current Tk1,500 per tonne. For MS products manufactured from billets or ingots, the tax may increase by Tk160 per tonne. In the case of ingots or billets produced from meltable scrap and MS products manufactured from those ingots or billets, the increase may be Tk220 per tonne.

A senior NBR official, speaking to The Business Standard on condition of anonymity, said the specific tax at the local production stage for MS rods should be higher than the current rate.

"After reviewing the matter, we are preparing a proposal for a reasonable increase in VAT," the official said.

However, Md Shahidullah, managing director of Metrocem Group, believes the current economic climate is not suitable for raising VAT.

Explaining his concerns, he said demand for steel and related construction materials had fallen sharply as infrastructure development activities slowed across the country. "In some cases, we are now forced to sell products below production cost just to stay in business."

"If additional VAT is imposed on these products in such a situation, demand may decline further, which will increase pressure on us," he said.

Industry insiders said steel rod prices were selling between Tk80,000 and Tk85,000 per tonne until March this year, but prices have risen since the outbreak of the conflict in the Middle East.

Shahidullah said rod prices currently range between Tk85,000 and Tk92,000 per tonne.

NBR officials, however, argued that an increase of Tk150 to Tk200 per tonne due to higher VAT would not significantly affect prices.

According to the Bangladesh Steel Manufacturers Association (BSMA), there are around 200 steel mills operating in the country, including approximately 40 large industrial enterprises. The sector's total installed production capacity is about 120 lakh tonnes annually.

Under normal market conditions, annual demand for various steel products – including MS rods, sheets, beams, angles and plates – exceeds 60 lakh tonnes. MS rods, or rebars, account for the largest share of the market and are widely used in the construction sector.

Industry stakeholders said demand for steel rods has fallen by nearly one-third due to a slowdown in real estate and private construction activities, high interest rates and broader economic uncertainty.

In 2015, Bangladesh and Vietnam shared the same S&P sovereign credit rating: BB–. A decade on, Vietnam stands at BB+, one notch from investment grade. Bangladesh has fallen to B+, its banking sector near the bottom of global risk rankings, and Fitch issued a negative outlook just days ago. This is not a sudden crisis. It is the accumulated cost of a decade of governance failures that Bangladesh's policymakers refused to confront while headline growth numbers held up.

Rating record

The table below tracks S&P's sovereign rating trajectory for all five countries over the past decade.

The divergence is unambiguous. Vietnam earned two upgrades from the same starting point; Bangladesh suffered one downgrade. Uzbekistan, unrated until 2019, has already surpassed Bangladesh. Kyrgyzstan – smaller, poorer and landlocked – debuted at B+ in March 2025, level with Bangladesh today despite having no prior rating. Cambodia, which Bangladesh should outrank on every structural metric, sits on exactly the same shelf. Bangladesh and Vietnam were rated identically in 2015. Today they are four notches apart – and the gap is widening.

How a decade was squandered

Three structural failures drove the decline. Forex reserves collapsed from $48 billion in August 2021 to below $20 billion in 2024, compounded by the revelation that headline figures had been inflated for years through inclusion of illiquid instruments. The banking sector failure was deeper: S&P places Bangladesh in Group 9 out of 10 on its Banking Industry Country Risk Assessment.

When Fitch downgraded Bangladesh in May 2024, NPLs stood at 9%; by December 2025 they had reached 30.6% as regulatory forbearance unwound. This is not a banking sector with a problem – it is a banking sector whose problem has finally been measured. A fiscal system generating tax revenue of just 7-8% of GDP provided no cushion, and the interest-revenue ratio hit 29% by end-2025, more than double the B-rated peer median. The student-led uprising of mid-2024, the fall of the Hasina government, and political uncertainty over elections compounded every structural vulnerability.

What peers did differently

Vietnam held to one strategy: export-led industrialisation with consistent macroeconomic management. The China-plus-one manufacturing shift found Vietnam ready; S&P upgraded it twice in six years. Bangladesh had the same garment base and labour cost advantage – and let the window close. Uzbekistan debuted at BB– in 2019 and has since climbed to BB: it brought Franklin Templeton in to manage Uzbekistan National Investment Fund, listed the fund on the London Stock Exchange in May 2026, raised $604 million with four times oversubscription, and made state enterprise governance internationally legible. Kyrgyzstan – smaller and poorer than Bangladesh, unrated until 2025 – raised $700 million in a debut Eurobond with three times oversubscription months after receiving its first rating. Both countries demonstrated institutional credibility and immediately accessed international capital markets. Bangladesh cannot.

Fitch warning of May 2026

On May 13, 2026, Fitch revised Bangladesh's outlook from stable to negative, affirming B+. The proximate trigger is the Middle East conflict – nearly half of Bangladesh's remittances originate there, and crude oil accounts for 15% of imports. But the conflict is the match, not the fuel: limited reform progress is eroding Bangladesh's capacity to absorb shocks.

Revenue fell when the IMF programme required it to rise. Constitutional reform is stagnant. Reserves at $29.5 billion sit below the B-rated median. A negative outlook shifts the burden of proof – Bangladesh must now demonstrate improvement, not merely avoid further deterioration. The three most likely triggers for an unscheduled downgrade to B are a fracture in the IMF programme, reserves falling below three months of import cover, or a major bank failure. At B – Pakistan's cohort – most institutional mandates prohibit exposure to Bangladesh sovereign instruments.

Three scenarios

The base case without decisive action is a downgrade to B within 12 to 18 months. The second scenario – the negative outlook resolved without a downgrade – requires the conflict to de-escalate, reserves to hold above four months of cover, the IMF programme to stay on track, and NPLs to show credible improvement. Every condition must hold simultaneously. The upgrade path toward BB– is a 2028 to 2030 horizon at the earliest, requiring sustained reserve improvement, measurable NPL reduction, and tax revenue approaching 10% of GDP.

What a rating downgrade actually means

Rating downgrades are not abstract. Their consequences are concrete, immediate, and compound across every layer of the economy. Six transmission channels matter most for Bangladesh.

Borrowing costs rise system-wide. Treasury bill yields reached 12% by late 2024 – up from under 7% two years earlier – as investors demanded a higher premium to hold government paper. Higher yields feed the fiscal deficit, which feeds more borrowing, which feeds higher yields still: a self-reinforcing spiral that a further downgrade accelerates.

Trade finance becomes costlier and harder to access. Bangladesh's garment export economy runs on letters of credit. LC confirmation charges levied by foreign correspondent banks are directly linked to the sovereign rating. Exporters operating on 3 to 5% margins absorb those charges or lose orders to competitors whose banks carry no such premium. A move to B would make this materially worse.

FDI dries up. FDI fell 8.8% in FY2024; Standard Chartered Bank Bangladesh's CEO attributed the decline explicitly to rating downgrades reducing risk-adjusted returns. A B rating places Bangladesh alongside Pakistan – no multinational building a medium-term Asia investment case allocates to a B-rated country when BB-rated alternatives exist.

Portfolio capital exits in advance. Many institutional mandates prohibit exposure below BB–. Bangladesh crossed that threshold in 2024. Portfolio investment was already a $111 million net outflow in FY2024. The Fitch negative outlook will have triggered repositioning across mandated investors before any formal rating action occurs.

The sovereign-bank nexus tightens. Public sector credit growth surged to 24% by October 2025 against private sector growth of just 6%. As the sovereign's rating falls, state-owned banks' access to foreign credit lines weakens and their funding costs rise. A sovereign downgrade cascades through the entire banking system the government owns.

LDC graduation compounds the risk. Bangladesh is supposed to graduate from Least Developed Country status in November 2026, losing preferential tariff access that partly underpins its EU garment market. That graduation was designed for a Bangladesh growing at 6 to 7%. Fitch forecasts 3.7% for FY2026. The combination of LDC graduation and rating deterioration creates a double vulnerability with no coherent plan to manage both simultaneously.

A downgrade is not just a signal – it is a tax on every borrower in Bangladesh, from the government to the garment exporter to the bank issuing a Letter of Credit, eventually every individual in Bangladesh.

Conclusion

Bangladesh's rating decline is not irreversible – but it is accelerating. The economic fundamentals remain: a large remittance base, a competitive garment sector, a young labour force. What has been absent is the institutional commitment to make those fundamentals credible to external investors. The rating agencies are explicit about what recovery requires: reserves above the B-rated median, NPLs measurably reduced, tax revenue approaching 10 percent of GDP, and reform continuity through a post-election government. What is absent is not knowledge of what to do. The Fitch negative outlook of May 2026 is a final warning that the window is closing – and that the next action, if nothing changes, will not be an affirmation.

Ershad Hossain, director, Putnam Capital Advisory Pte Ltd, Singapore

This commentary is prepared for informational purposes only and does not constitute investment advice. Putnam Capital Advisory Pte Ltd is a Singapore-incorporated advisory firm active in Bangladesh's capital markets.

Bangladesh generates a significant share of the world’s raw leather each year, yet earns only a fraction of what the material is worth due to compliance failures and decades of neglected infrastructure, according to industry leaders.

They point to shortcomings at the Savar Tannery Industrial Estate that have kept the country locked into low-value exports and shut out of premium global markets.

Bangladesh accounts for around four percent of the world’s rawhide and skin resources and produces an estimated 350-400 million square feet of hides and skins annually, according to Md Mizanur Rahman, professor and director of the Institute of Leather Engineering and Technology at the University of Dhaka.

“The country could generate up to $10-$12 billion in export earnings from its existing raw materials alone if the sector were fully utilised,” he said.

“We are sitting on a huge resource, but we are not using it properly,” Rahman added.

He estimates that nearly 30 percent of the country’s leather is wasted due to poor preservation, inadequate processing capacity and the lack of proper utilisation of tannery by-products.

According to the professor, the leather sector offers one of the highest value-addition opportunities in Bangladesh’s manufacturing industry, with up to 90 percent value addition possible as most raw materials are sourced locally.

He noted that foreign buyers, particularly Chinese firms, often purchase Bangladeshi leather for as little as 40-50 cents per square foot and later sell processed leather in international markets for around $2 per square foot.

Much of the profit from Bangladesh’s leather ends up overseas, while local traders and producers receive low prices for rawhides, he added.

According to Rahman, much of the potential lies in by-products that currently go unused.

He noted that tannery waste can be processed into collagen, gelatin, fertiliser and animal feed – industries that, if formalised, would create new demand for hides and push up their market value. “Nothing from leather should go to waste. Every part has economic value.”

The timing of supply adds another layer of difficulty. Some 40-45 percent of the country’s annual rawhide comes to market within three days of Eid-ul-Azha, placing enormous strain on processing capacity and making efficient handling critical to securing better prices.

The DU professor said the lack of internationally compliant environmental infrastructure at the Savar Tannery Industrial Estate has further limited the sector’s ability to move up the value chain.

Md Tipu Sultan, chairman of the Bangladesh Finished Leather, Leather Goods and Footwear Exporters Association (BFLLFEA), said the country’s leather sector continues to receive lower prices in international markets mainly because many factories have yet to meet globally recognised compliance standards.

“If we can move quickly on these issues, it will make a significant difference,” he said.

The compliance gap is the central obstacle for the sector’s growth, he noted, stating that only a handful of factories currently hold the internationally recognised certifications required by buyers in the United States and European markets.

“One or two compliant factories are not enough. If at least 50 out of around 150 factories can achieve those standards, more compliance-focused buyers will source products from Bangladesh,” Sultan said.

“If we can move quickly on these issues, it will make a significant difference,” he added.

If progress continues, he said, many of the recurring problems facing the leather sector could be resolved before the next Eid-ul-Azha season.

At the factory level, the frustration runs deeper. Md Salauddin Ahmed, managing director of New Kajol Tannery Ltd and treasurer of the BFLLFEA, traces the industry’s current predicament to the forced relocation of tanneries from Hazaribagh to Savar – a move the government promised would come with full infrastructure support.

“The government shifted us to Savar with the promise of providing all necessary facilities. But many factories moved before essential infrastructure was ready,” he said.

Even years after the relocation, several tanneries still face shortages of gas and other utilities, while the central effluent treatment plant (CETP) has yet to operate at the expected standard, he added.

These shortcomings have prevented the sector from obtaining internationally recognised certifications, including approval from the Leather Working Group (LWG), a key requirement for supplying many global brands.

“As a result, major European buyers are not coming to Bangladesh. We are largely dependent on Chinese buyers, who currently dictate prices,” Ahmed said.

That dependence shows in the margins. Processed leather is selling at $0.50–0.55 per square foot, barely enough to cover costs. With most chemicals imported and the dollar strengthening, even cheap raw hides offer little relief.

“We import most of our chemicals, and costs have risen sharply due to the stronger dollar. Even when we purchase raw hides at relatively low prices, we struggle to make a profit,” he said.

According to Ahmed, the lack of buyer diversification has weakened the industry’s bargaining power and contributed to the decline in hide prices.

“If we can ensure proper environmental compliance and secure LWG certification, European and other international buyers will return. Then we can sell leather at much better prices and pay higher prices for raw hides as well,” he said.

Depositors of six troubled non-bank financial institutions (NBFIs) yesterday demanded that the government issue a gazette notification ensuring full repayment of their deposits, along with profits, by the end of this year.
Speaking at a press conference at the National Press Club, an alliance of the affected depositors claimed that they were being kept in the dark about the government’s plans for them.
Neither the Bangladesh Bank nor the finance ministry had officially communicated with them despite a silent protest and memorandum submitted on May 6, they said.

In a press statement, the alliance said around 12,000 depositors were still waiting for clarity regarding the fate of their savings, many of whom had been unable to access their money since 2019.
“We are only hearing things through the media. No ordinance has been issued yet. No official government order has reached us,” said Jafar Ullah Khan, convenor of the Alliance of 6 NBFIs Depositors Recovery Committee.

“We will not accept any under process language as an alternative to a legal commitment. Issue the gazette notification. Fix a timeframe. Give it in writing,” he added.

The alliance argued that the central bank must take responsibility for ensuring their payment as the depositors had placed their life savings in institutions approved by the regulator.

The depositors did not gamble or make risky investments, they said, adding that teachers, pensioners, widows, and retired individuals deposited their savings relying on the regulator’s approval of the institutions.The depositors also rejected any proposal to return only the principal amount without profits.
Kawsar Hossain Chowdhury, co-founder and coordinator of the alliance, said contractual profits were promised under the deposit schemes and depositors should not bear losses caused by institutional failures and regulatory negligence.“Now, we are being offered only the principal money back -- as if years of waiting have no value, as if inflation does not exist,” he said.

Citing inflation data and contractual deposit rates, the alliance claimed that a depositor who invested Tk 10 lakh in 2019 had effectively suffered a loss of more than Tk 12 lakh due to inflation and loss of profit income.The platform also demanded criminal proceedings against directors, officials, and default borrowers responsible for the collapse of the institutions.

It called for recovery of assets from defaulters, publication of a public register naming responsible individuals, and ensuring that no one is exempted from liability.Munira Khan, former member of the National Human Rights Commission, said the affected depositors were not beggars seeking aid for underprivileged people, but rather demanding the return of their own funds stuck in the NBFIs.

She said they wanted an implementable roadmap for refunding the money, not verbal promises.The Bangladesh Bank did not issue any warning while the institutions, that the regulator itself had approved, were being looted, said Prof Farid Rashid Kamal, who is also one of the affected depositors.

Auditors and credit rating agencies also presented rosy pictures of the NBFIs, he added, noting that all those responsible for safeguarding the institutions failed in their duties.

“Now, it is a moral duty of the government to ensure the return of the funds,” he added.

Bangladesh's apparel exports to the European Union (EU) fell 19.26 percent year-on-year to €2.89 billion in January-February this year, according to data from Eurostat.

Exports stood at €3.57 billion during the same period a year earlier.

In terms of volume, Bangladesh’s apparel exports to the bloc declined 11.14 percent to 205.52 million kilogrammes during the two-month period.

Eurostat data also showed a decline in unit prices, with the average export price per kg falling 9.13 percent year-on-year to €14.04.

February saw export value falling 12.39 percent, volume dropping 3.30 percent, and unit prices declining 9.39 percent on a year-on-year basis.

During the January-February period, China’s apparel exports to the EU rose to €4.20 billion, although export value posted a negative growth of 4.01 percent. Unit prices declined 5.27 percent, while export volume increased 1.34 percent.

Meanwhile, Turkey recorded a 22.91 percent decline in apparel exports to the EU to €1.20 billion, while Vietnam posted a 2.06 percent fall to €711.73 million despite a 6.56 percent rise in unit prices.

During the same period, the EU’s total apparel imports saw negative growth at 11.27 percent year-on-year to €13.83 billion.

Apparel imports by the bloc also fell 6.23 percent in volume, while average unit prices declined 5.38 percent in 2026.

India's growing reliance on Venezuelan crude comes as the closure of the Strait of Hormuz disrupts a major corridor for its oil imports, forcing a rapid shift in supply chains and energy diplomacy.

What is driving the crisis?

The escalation of conflict involving Iran has led to the closure of the Strait of Hormuz, a key maritime route through which nearly half of India's crude oil imports typically pass. A US naval blockade of Iranian ports has also halted Iranian shipments to India this month. Reports Al Jazeera.

At the same time, supply from other Gulf partners has tightened. Imports from Saudi Arabia have fallen sharply from about 670,000 barrels per day in April to roughly 340,000 barrels per day in May. Indian officials have also raised concerns about maritime security after multiple incidents involving India-linked vessels, including one ship that sank following a suspected attack.

Why is India turning to Venezuela?

With Gulf flows constrained, India has increased imports from Venezuela, which now ranks as its third-largest crude supplier this month.

Shipments have risen by nearly 50% from April to around 417,000 barrels per day in May, after a nine-month period with no exports to India.

The country holds the world's largest oil reserves, estimated at 303 billion barrels, and about 17% of global totals. Its re-emergence as a supplier is also linked to shifts in US policy following the removal of former President Nicolas Maduro by US forces in January 2026, which led Washington to push Venezuelan crude into global markets.

What role is the United States playing?

The United States is actively shaping this realignment. US Secretary of State Marco Rubio is visiting India from (23–26 May) to discuss energy security and trade, with Washington signalling it wants to sell India "as much energy as they'll buy".

At the same time, the US is encouraging Venezuelan exports to reduce Iran's leverage in negotiations and to push diversification away from Russian oil.

Venezuelan Acting President Delcy Rodriguez is also expected in India next week to discuss future oil sales.

Can Venezuelan crude replace Gulf supply?

Venezuela's crude is ultra-heavy and sulphur-rich, making it harder to process in many refineries. However, it is considered well suited for Reliance Industries' Jamnagar refinery in Gujarat, one of the few global facilities designed to handle such grades efficiently.

This compatibility gives India a limited but important alternative supply option as Gulf flows remain disrupted.

However, the scale of Venezuela's current exports to India—around 417,000 barrels per day—remains well below the combined volumes historically sourced from Gulf suppliers, particularly during normal Strait of Hormuz operations.

What does this shift mean globally?

The US-backed reopening of Venezuelan oil flows is also seen as part of a broader effort to reshape global energy supply chains. The strategy aims to reintegrate Venezuela's oil sector—home to the world's largest reserves—into global markets while reducing leverage held by Iran and Russia.

US companies including Chevron currently produce about 250,000 barrels per day in Venezuela, while ExxonMobil is reportedly seeking to re-enter the country after nearly two decades.

Venezuelan oil is helping India offset some immediate supply disruptions from the Gulf, but it does not fully replace the scale or strategic importance of routes affected by the Hormuz closure.

The shift instead reflects a broader reordering of energy flows, where Venezuela is becoming a temporary pressure valve in a system still heavily exposed to geopolitical risks in the Middle East.

Only one bank will be able to pay cash dividends next year after the Bangladesh Bank barred lenders with paid-up capital below Tk 2,000 crore from making such payouts.

In a circular issued yesterday, the Bangladesh Bank (BB) said the move is aimed at strengthening the capital base of the banking sector. It also seeks to improve the ability of commercial lenders to absorb future risks amid a challenging global and domestic financial environment.

Only BRAC Bank and National Bank PLC (NBL) meet the higher paid-up capital threshold among listed lenders.

However, National Bank remains in significant losses, leaving BRAC Bank as the only institution effectively positioned to meet the requirement for cash dividend payments.

Even for banks that meet the paid-up capital threshold, the central bank has capped cash dividends at 50 percent of the declared payout, with the remainder to be issued as stock dividends.

The new rules will take effect from dividend declarations for the year ending December 31, 2026 and onwards, according to the Supervision Policy and Coordination Department of Bangladesh Bank.

The policy is expected to affect most listed banks, raising concerns among market participants about shareholder returns.

While the measure may improve the resilience of the banking sector in the long run, it is likely to reduce flexibility for banks that are otherwise financially stable.

Mashrur Arefin, chairman of the Association of Bankers, Bangladesh (ABB), the apex body of the country’s commercial bank executives, said, “This is a good move towards strengthening the capital base of the banks.”

He said a few banks with weak capital bases did take cash out in the past. But the shareholders of healthy banks will now suffer. “That’s not good.”

The ABB chairman said the dividend rule should instead have been linked to the Capital Adequacy Ratio, which he argued would have been fairer for shareholders of well-performing banks.

“Shareholders have a reasonable expectation of cash returns when a bank is performing well. That incentive for supporting strong banking institutions is being overlooked,” said Arefin, who is also managing director and chief executive officer of City Bank.

“This will not help our agenda to encourage people to go to the capital market for their investments. I don’t know why CAR wasn’t considered. Is it because the government is seeking higher credit growth? But that connection is too distant.”

Banks can raise paid-up capital through rights shares to meet the Tk 2,000 crore threshold and retain eligibility for cash dividends. A rights issue allows existing shareholders to buy additional shares, usually at a discounted price, in proportion to their current holdings.

Asif Khan, president of CFA Society Bangladesh, also opposed linking dividend eligibility to paid-up capital, suggesting it should instead be tied to shareholders’ equity, capital adequacy ratio and provisioning levels.

He said that only one bank now effectively meets the Tk 2,000 crore threshold. So, most of the commercial lenders will be unable to pay cash dividends from next year, which could affect the capital market.

According to Dhaka Stock Exchange (DSE) data, National Bank PLC has the highest paid-up capital among listed lenders at Tk 3,219 crore, followed by BRAC Bank at Tk 2,289 crore and City Bank at Tk 1,749 crore.

Other major lenders include Eastern Bank (EBL), Islami Bank Bangladesh, United Commercial Bank, Pubali Bank, Bank Asia, Southeast Bank and Prime Bank, all of which fall below the paid-up capital threshold.

EBL’s paid-up capital stands at Tk 1,643 crore, Islami Bank Bangladesh’s at Tk 1,609 crore and United Commercial Bank’s at Tk 1,550 crore, according to Dhaka Stock Exchange (DSE) data.

Pubali Bank has Tk 1,496 crore, Bank Asia Tk 1,391 crore and Southeast Bank Tk 1,373 crore, while Prime Bank’s paid-up capital is Tk 1,218 crore.

Khan said many of these banks maintain strong capital adequacy ratios and have no provisioning shortfalls.

“So, why would they be barred from giving cash dividend?”

He also pointed to a possible policy conflict with the National Board of Revenue (NBR), which imposes higher tax on listed firms that do not pay cash dividends.

The Bangladesh Bank said the decision was taken considering the overall condition of the banking sector, depositor protection, financial resilience and the need to strengthen capital conservation buffers.

A senior central bank official said the policy was intended to improve the health of the banking sector and protect depositors’ interests.

Other eligibility criteria for dividend payout would remain unchanged, he added.