“The most immediate economic impact… is considerable increases in Freight costs and prices of oil, gas and fertilizers.”said Hamza Ali Malik, director of the Macroeconomic Policy Division of the UN’s Asia-Pacific development arm (ESCAP). UN News.
He warned that this is likely to be followed by higher inflation, weaker exports and higher debt risks.
Shock waves from the Strait of Hormuz
Total number of daily ship transits through the Strait of Hormuz.
At the center of the disruption is the Strait of Hormuz, one of the world’s most critical maritime chokepoints.
The narrow passage leads about a quarter of world oil trade by seaalong with significant volumes of liquefied natural gas and fertilizers. The escalation of hostilities has paralyzed ship transits, causing immediate reactions in global energy markets.
Volatile Brent crude oil prices have risen well above $100 a barrel, while higher shipping and insurance costs add to the tension.
These crises impact supply chains and raise concerns not only about trade and development, but also the delivery of humanitarian assistance and essential goods.
Supply chains under pressure
The impact is being felt on all shipping routes, with major shipping companies suspending their services to the Middle East and containers stranded in congested ports. At least 20,000 seafarers in the region are also affected.
“There is Significant early signs of disruption of sea routes.”said Rupa Chanda, Director of ESCAP Trade Division, adding that the effects are already affecting key industries.
Shortage of helium and specialty gases from the Gulf is creating an “almost immediate crisis” for the production of semiconductors and advanced electronics, while disruptions in petrochemical raw materials threaten manufacturing in major Asian economies.
Fertilizer shortages are also raising concerns about future crop yields across South Asia (home to nearly two billion people) and beyond.
People queue to fill their gas cylinders in Colombo, Sri Lanka. (file photo)
Rising prices affect households
Rising energy prices are directly fueling inflation and the cost of living.
UN estimates indicate that oil prices have increased by around 45 percent and gas prices by 55 percent since the end of February.with a 35 percent increase in fertilizer prices. Regional inflation could rise to 4.6 percent in 2026, up from 3.5 percent in 2025.
In several countries, rising fuel prices are already raising transportation, production and food costs, hitting the poorest households hardest.
Country-level impacts intensify
In Sri LankaWhere oil accounts for about a quarter of total imports, authorities have introduced fuel rationing and scaled back public events to conserve supplies. Schools have moved to a four-day week, while public sector operations have been scaled back.
In PakistanFuel and food prices rose overnight and there were long lines at gas stations. Authorities have introduced fuel conservation measures, including a four-day work week, school closures and work-from-home policies.
Hit by crisis Burma It also faces serious pressures. Fuel shortages have led to strict rationing, disrupting transportation, businesses and humanitarian operations.
“These disruptions are adding new strain to Myanmar’s economy. that was already under pressure,” said Gwyn Lewis, acting UN Resident and Humanitarian Coordinator. “Prices are rising, essential goods are harder to find and families’ purchasing power continues to fall.”
Migrant workers wait outside Tribhuvan International Airport in Kathmandu before leaving for the Middle East. (file photo)
From economic shock to domestic crisis
In NepalThe crisis is felt not only in economic terms, but also in daily life. At least one migrant worker has died in the Gulf, dozens have been injured and tens of thousands have been stranded – unable to return home or travel to their workplaces.
More than 1.7 million Nepalese migrants work in the Gulf, accounting for more than 65 percent of overseas labor migration. Remittances – many of them from the Gulf – account for more than a quarter of Nepal’s GDP and support almost 6 in 10 households.
“This is not a distant crisis for Nepal. It is very close and very personal,” said Numan Özcan of the International Labor Organization (ILO).
A region at risk
The magnitude of the impact varies, but if the crisis persists, the consequences will be serious.
ESCAP warns of growth in developing countries in Asia and the Pacific Economies could slow to around 4.0 percent in 2026.up from 4.6 percent in 2025. Poverty, food insecurity and inequality could worsen, along with job losses and the potential displacement of migrant workers..
To mitigate the impact, ESCAP calls for coordinated policy measures, including targeted fiscal support, cash transfers and support for small businesses.
Countries may also need to tighten monetary policy to manage inflation and financial stability risks, while longer-term efforts should focus on diversifying energy sources, trade routes and supply chains.
An informal sector worker eats on the roadside in Bangkok. (file photo)
The human cost
But beyond the economic consequences, the deepest concern is the human cost – as global crises are increasingly felt in homes and villages.
“As the crisis continues, The main risk is that an external economic shock turns into a domestic crisis,”said Numan Özcan of the ILO.