When Wars Far Away Hit Home Hard

Bombs do not have to fall on a country to ruin it. Since February 2026, US and Israeli strikes on Iran, followed by an Israeli assault on Lebanon and the blockade of the Strait of Hormuz, have set off a chain of damage that reaches from the Persian Gulf to the rice fields of Bengal and the tea gardens of Sri Lanka. The latest report by the United Nations Development Programme (UNDP), Military Escalation in the Middle East: Human Development Impacts Across Asia and the Pacific, puts hard numbers on what distant war does to ordinary people who have no part in fighting it.

The numbers are clear. Across Asia and the Pacific, economic output losses could range between $97 billion and $299 billion – between 0.3% and 0.8% of the region’s total GDP. Around 8.8 million people in 14 countries studied face the risk of sliding into poverty. And South Asia, already home to some of the world’s poorest people, stands out as the most exposed subregion of all.

The pipes through which damage flows

Three circuits carry the crisis from the Gulf to Asian households, as shown by UNDP. The first is energy. The Strait of Hormuz carries roughly one-fifth of the world’s oil supply. More than 80% of the crude oil and liquefied natural gas that passes through it is headed for Asian markets. When the strait was blockaded, prices spiked and supply lines buckled. Of the 36 countries the UNDP assessed, 33 reported high vulnerability to oil-price shocks.

India is an extreme case. It imports over 90% of its oil needs. More than 40% of its crude and 90% of its LPG come from West Asia. The disruption hit households, farms, and factories at the same time.

The second circuit is trade. Twenty-five of 36 countries face significant supply-chain damage. War-risk insurance for ships jumped by more than 1,000%. Rerouting vessels away from the Red Sea and the Gulf extends Asia-Europe shipping voyages from 31 to 41 days. Air-freight rates climbed by up to 70%. India alone has roughly $48 billion in non-oil exports at risk – among them basmati rice, tea, gems, jewellery, and apparel, all heading to markets now harder to reach.

The third circuit is remittances. Tens of millions of South Asians work in the Gulf states. The money they send home keeps families fed, children in school, and local economies alive. When conflict disrupts Gulf economies, that money slows or stops.

South Asia: The hardest hit

The UNDP report identifies South Asia as the subregion with the largest losses, both in absolute terms and relative to Gross Domestic Product (GDP). Output losses for South Asia alone could exceed $183 billion – up to 3.6% of the subregion’s GDP in the most severe scenario. Between 1.7 million and 8 million South Asians could be pushed into poverty.

India faces the greatest strain in absolute numbers. The crisis could set back India’s Human Development Index progress by 0.03 to 0.12 years. In a severe scenario, up to 2.5 million more Indians could fall into poverty, lifting the poverty rate from 23.9% to 24.2%. About 38-40% of India’s inward remittances come from the Gulf, where 9.37 million Indian citizens live and work.

The timing is particularly bad for agriculture. The Kharif planting season begins in June, and the crisis has disrupted fertiliser supplies precisely when they are needed most. West Asian countries supply over 45% of India’s fertiliser imports. Although India holds 6.1 million tonnes of urea in reserve, 85% of domestic urea production depends on imported gas – now priced at crisis levels. In healthcare, raw material costs for medical devices have risen by 50%, and medicine prices have increased by 10–15%.

Pakistan is in an even more precarious position. More than half of all worker remittances flow from Arab countries. The poverty rate, already at 44.7%, could rise further, pushing an additional 4,22,000 people below the poverty line. Food inflation is projected to climb by up to 5 percentage points, driven by higher freight costs and costlier fertilisers. The government has already moved to a four-day working week and a 50% work-from-home policy to conserve fuel – signals of fiscal stress that few developing countries can sustain for long.

Bangladesh may see a smaller absolute increase in poverty – around 32,000 additional people – but the threat to its garment industry is significant. Disrupted air-cargo routes and longer sea journeys mean delayed shipments and broken contracts in a sector that the country depends on for foreign exchange. Between 46% and 50% of Bangladesh’s remittances come from Gulf Cooperation Council (GCC) countries, meaning the slowdown there will be felt quickly in Dhaka and in villages across the country.

Nepal is among the most structurally exposed of all. Remittances equal about 26% of Nepal’s GDP, and 41% of those inflows come from West Asia. The country has very limited fuel reserves. The UNDP projects that Nepal could lose 0.02 to 0.09 years of HDI progress, and around 9,500 more Nepalis could fall into poverty.

Sri Lanka, still recovering from its 2022 economic collapse, faces a new wave of pressure. Oil accounts for about 59% of its primary energy use. Tourist arrivals – a crucial source of revenue – fell by around 40% in early March 2026 alone. Weekly tea export losses are estimated between $10 million and $15 million. The Maldives, similarly dependent on tourism, saw arrivals drop 23.4% year-on-year in the first week of March, with monthly revenue losses potentially reaching $85-100 million.

The human cost behind the statistics

It is worth pausing on what these numbers mean in practice. A family in Kerala that depends on a father’s earnings from Riyadh waits for a transfer that is smaller than last month’s. A Bangladeshi garment worker worries whether her factory will lose its European orders because ships take too long to arrive. A Pakistani farmer faces the choice between buying fertiliser at a price he cannot afford or planting less and harvesting less. A Nepali student whose school fees are paid with Gulf money wonders whether next term is still possible.

The UNDP report is careful to describe this not merely as a market shock but as a human development crisis. Market shocks can be temporary. Human development setbacks – lost years of schooling, children pulled back into poverty, healthcare delayed or skipped – can last a generation.

What governments are doing, and what they should do

Governments across South Asia have responded with emergency measures. India diverted gas from industrial users to households and maximised domestic LPG production. Pakistan instituted fuel-saving work policies. Malaysia spent roughly $801 million per month on fuel subsidies to stop retail prices from spiking. These are rational short-term responses, but they deplete fiscal buffers fast.

The UNDP report warns explicitly that if the conflict is prolonged, governments will exhaust their financial room to manoeuvre. When that happens, permanent reversals become possible – in poverty reduction, in school enrolment, in the basic services that took decades to build.

The lesson is clear enough. South Asia has long known that its economies are tied to the Gulf – through labour migration, energy imports, and trade routes that pass through some of the world’s most volatile geography. The crisis of 2026 has exposed it with unusual force.

Building strength means diversifying energy sources and suppliers, reducing fertiliser import dependence through domestic investment, expanding trade route options, and creating stronger social protection systems that can absorb external shocks without leaving the poorest to bear the full cost

A call for solidarity

A temporary ceasefire reportedly took effect on April 7, 2026. But the underlying conflict remains unresolved, and the economic disruption it caused continues to ripple outward. South Asia did not start this war. Its farmers, workers, and families are not on any battlefield. But they are paying a price measured in higher food bills, smaller remittances, and retreating livelihoods.

The UNDP report is a reminder that human development is delicate and that progress built over decades can be undone in weeks when supply chains break and energy prices surge. The world needs a serious conversation about building an international order where wars – wherever they happen – do not routinely destroy the slow, hard-won gains of the world’s poorest people. The cost of conflict is never borne only by those who fight it.

K.M. Seethi, Director, Inter University Centre for Social Science Research and Extension, is the Academic Advisor of the International Centre for Polar Studies at Mahatma Gandhi University, Kerala. He also served as ICSSR Senior Fellow, Senior Professor and Dean of International Relations at MGU.

This article was originally published on The Wire.
Views in this article are author’s own and do not necessarily reflect CGS policy.