The ongoing crisis in the Middle East is having far-reaching global consequences, with UN agencies warning of rising fuel prices, disrupted shipping routes, and growing financial uncertainty that are straining economies and households across Asia and other developing regions. The Strait of Hormuz, which previously handled around one-fifth of global oil supplies, has seen ship traffic plummet from over 100 vessels daily to as few as two, driving up energy costs and insurance premiums worldwide.
Global growth is now projected to slow to 2.5 percent in 2026, well below pre-pandemic levels, while trade growth is also weakening. Inflation has surged across Asia, with countries such as Laos and Pakistan experiencing sharp increases in consumer prices. East Asia’s growth is expected to ease from 5 percent in 2025 to 4.4 percent in 2026 as higher energy costs and trade uncertainty weigh on the outlook.
Currencies in several countries have weakened against the US dollar, raising import costs and borrowing expenses. Nepal’s rupee, for example, has depreciated significantly, underscoring the vulnerability of economies with limited fuel reserves. ESCAP cautioned that prolonged instability could trigger disruptions comparable to the 1973 oil shock, with risks of recession and double-digit inflation in fragile economies.
In Myanmar, where conflict and displacement have already devastated livelihoods, fuel prices have tripled since February, and food costs have soared. The World Food Programme warns that one in four people are acutely food insecure, with rising fuel and fertilizer costs threatening survival and the upcoming planting season.
The International Labour Organization has highlighted the strain on global labour markets, noting that higher energy costs, weaker tourism, disrupted migration, and slowing trade are affecting jobs and wages. Under one scenario, global working hours could fall by 0.5 percent in 2026 and 1.1 percent in 2027, equivalent to 14 million and 38 million full-time jobs respectively. Real labour incomes could decline by as much as $3 trillion globally by 2027, with Asia-Pacific and Arab states most exposed.
Remittance flows, vital for millions of families in labour-sending countries, are weakening as deployments to Gulf states decline. The ILO warns that this could deepen poverty and reduce consumption in countries of origin. ESCAP emphasized that the crisis underscores the importance of resilience, noting that economies prepared for energy and supply shocks are better positioned to withstand future disruptions.
