Impacts of the Russia-Ukraine War Price Shocks on the Bangladesh Economy: A General Equilibrium Analysis
Publisher: International Food Policy Research Institure
Author(s): Tahreen Tahrima Chowdhury, Paul Dorosh, Rizwana Islam, and Angga Pradesha
Date: 2023
Topics: Livelihoods, Renewable Resources
Countries: Bangladesh, Russian Federation, Ukraine
The spike in global commodity prices caused by the Russia-Ukraine war has had major adverse impacts on many developing countries, including Bangladesh, that still depend heavily on energy and food imports. Although the Bangladesh economy has rebounded after the COVID-19 pandemic, the latest global trade shock has threated to increase food insecurity and poverty. This study utilizes the Bangladesh RIAPA economywide model to assess the impact of increases in global commodity prices and explores potential policy interventions to reduce negative impacts. Simulation results show that increases in international commodity prices create a GDP loss of 0.36 percent and an increase of three million in the number of poor (mainly rural poor). Energy price shocks account for most of this decline in real GDP (0.28 percent). The fertilizer subsidy helps spur agriculture production which leads to an increase in crop GDP by 0.78 percent and total agricultural GDP by 0.43 percent.