Impacts of the Russia-Ukraine War Price Shocks on the Bangladesh Economy: Policy Responses and Development Outcomes

This study analyses the impact of global commodity price shocks associated with the Russia-Ukraine war on the Bangladesh economy. Using an economy-wide model of Bangladesh, we find that the global price shocks decrease Bangladesh's GDP by 0.3 per cent, driving an additional 4.7 million and 3.8 million people into poverty and hunger, respectively. A hypothetical increase in subsidy and cash transfer programs could be very beneficial to the vulnerable groups, reducing the poverty increase by about half. An alternative policy of price subsidies is superior to cash transfers in stimulating consumption demand. Still, the targeted cash transfer program is more effective in helping vulnerable groups and reducing negative impacts on development outcomes.