Latest / ACLED Audio / REPORT: Economic shockwaves from the Iran war fuel protests across South Asia

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REPORT: Economic shockwaves from the Iran war fuel protests across South Asia · ACLED Audio

• 0:06
  SPEAKER_00: Economic shockwaves from the Iran War fuel protests across South Asia.
• 0:11
  SPEAKER_00: South Asia was one of the first regions to experience the economic fallout from the Iran conflict.
• 0:17
  SPEAKER_00: The impacts are only increasing with time, and growing economic hardship, along with government's responses, has already translated into unrest.
• 0:27
  SPEAKER_00: ACLED records more than 1,200 demonstrations across South Asia related to the economic impact of the Iran war, including over a shortage of cooking gas and fuel and the rising cost of living.
• 0:42
  SPEAKER_00: No country in the region is immune to the economic fallout, and protests over the rising cost of living have been recorded in each one of them.
• 0:50
  SPEAKER_00: Refer to the map in the report for details.
• 0:53
  SPEAKER_00: Across South Asia, these demonstrations have increased from an average of three per day before the war to 15 now.
• 1:01
  SPEAKER_00: This increase has been most stark in Pakistan and Nepal, countries especially reliant on oil and gas imports and remittances from the Gulf.
• 1:11
  SPEAKER_00: India, given its size, also unsurprisingly recorded a significant number of demonstrations on the issue.
• 1:18
  SPEAKER_00: An outlier is Bangladesh, the third most populous country in the region, with similar economic dependencies, but relatively few protests.
• 1:27
  SPEAKER_00: Its government's early introduction of mitigating measures has seemingly bought it time.
• 1:33
  SPEAKER_00: The protests, all but a handful of which have been peaceful, serve mainly as an expression of grievances.
• 1:40
  SPEAKER_00: Most people understand that the crisis is global and their own government's ability to shape outcomes is limited.
• 1:47
  SPEAKER_00: However, as the war drags on and price shocks continue to degrade living conditions, protests are becoming more frequent.
• 1:56
  SPEAKER_00: Refer to the graph in the report for details.
• 1:59
  SPEAKER_00: The longer the war continues, the more likely it is that citizens' patience with their governments runs out and disorder spirals.
• 2:08
  SPEAKER_00: Even if the Strait of Hormuz were to reopen soon as part of the ceasefire negotiations, supply chains for the region will take longer to recover and stabilize.
• 2:19
  SPEAKER_00: As political constraints in many countries coincide with these new economic realities, continuing unrest in the streets is expected.
• 2:28
  SPEAKER_00: What's driving the protests in each country?
• 2:31
  SPEAKER_00: Pakistan imports the overwhelming majority of its oil, and over 90% of its oil and gas imports pass through the Strait of Hormuz.
• 2:40
  SPEAKER_00: It was one of the first countries in South Asia to increase gasoline and diesel prices, and the overall increase in domestic fuel prices since the war began is the second highest globally.
• 2:52
  SPEAKER_00: It is therefore unsurprising that three-quarters of all protests in the country over the rising cost of living are directly over the increase in fuel prices.
• 3:02
  SPEAKER_00: India first felt the war's impact through an increase in the cost of liquefied petroleum gas, or cooking gas cylinders, which caused a spike in demonstrations in mid-March.
• 3:14
  SPEAKER_00: As a large economy, it is better equipped to absorb temporary shocks, but the government was finally forced to increase fuel prices in May, triggering renewed protests.
• 3:25
  SPEAKER_00: Demonstrations in the weeks after the war broke out were largely led by political parties seeking to capitalize on the crisis, but the proportion of demonstrations by non-political party actors picked up in April and May.
• 3:38
  SPEAKER_00: The growing involvement of labor unions and non-affiliated actors underscores the issue's increasing salience.
• 3:46
  SPEAKER_00: Bangladesh was one of the early adopters of fuel rationing, with the shortage of fuel prompting protests.
• 3:53
  SPEAKER_00: Three of the 13 total demonstrations related to the war's economic impact in the country involved violence, the highest percentage of demonstrations escalating into violence within the region.
• 4:05
  SPEAKER_00: ACLED data also show growing mobilization in Nepal as the economic fallout becomes more pronounced.
• 4:13
  SPEAKER_00: On the 14th of May, construction entrepreneurs staged nationwide protests over government inaction in the face of rising costs.
• 4:22
  SPEAKER_00: Whether it ends soon or not, the war will shape the region in the years to come.
• 4:27
  SPEAKER_00: Historically, labor-related issues have been a strong driver of mobilization across the region, with the power to force political change.
• 4:36
  SPEAKER_00: Demonstrations underpinned by economic grievances overthrew governments in Bangladesh, Nepal, and Sri Lanka, while farmer protests in India compelled one of the only major policy reversals from the Modi government.
• 4:51
  SPEAKER_00: If the war continues, Pakistan is likely to continue seeing the highest number of demonstrations.
• 4:57
  SPEAKER_00: The government's ability to shield the people from price shocks is limited as it complies with conditions on fiscal discipline after a loan from the International Monetary Fund, IMF, in 2024.
• 5:10
  SPEAKER_00: It also has no strategic oil reserves and is therefore more vulnerable to the war's economic impact the longer it continues.
• 5:19
  SPEAKER_00: In India, Bangladesh, and Nepal, unrest in the next few months is likely to intensify over fertilizers as the planting season gets underway with the onset of monsoon.
• 5:30
  SPEAKER_00: These countries import large quantities of fertilizers, and the war is likely to impact their availability, and in the most extreme case, food security.
• 5:40
  SPEAKER_00: Governments also subsidize fertilizers, and removing these subsidies will antagonize farmers, a powerful electoral constituency.
• 5:49
  SPEAKER_00: But continuing to pass on subsidies despite increased purchasing costs, will impact their respective fiscal positions and only create problems further down the line.
• 5:59
  SPEAKER_00: Rising prices of crude oil and fertilizers have already increased pressure on India's foreign exchange reserves, pushing the rupee to record lows.
• 6:09
  SPEAKER_00: Bangladesh, which has seen relatively few demonstrations for a country of its size, could emerge as a new hotspot.
• 6:17
  SPEAKER_00: Its government expects economic distress and, just last week, requested fresh financial assistance from the IMF.
• 6:25
  SPEAKER_00: For Sri Lanka, which was on a path to stability after the 2022 economic crisis, the Middle East war and a devastating cyclone toward the end of 2025 have already worsened the economic outlook.
• 6:39
  SPEAKER_00: Public discontent over the war's growing impact, coupled with recent corruption allegations that have hit the new government, could once again precipitate domestic unrest.
• 6:50
  SPEAKER_00: But even if the war were to end soon, economic hardships would be unlikely to disappear immediately, as supply chains and Gulf energy infrastructure will take longer to return to pre-war functionalities.
• 7:03
  SPEAKER_00: With all countries in the region relying on imported fuel, this means that price fluctuations will continue in the short term.
• 7:11
  SPEAKER_00: It may also already be too late for India, Bangladesh, and Nepal to avoid the impact of fertilizer shortages ahead of the planting season.
• 7:20
  SPEAKER_00: This economic disruption also comes at a precarious time for Bangladesh and Nepal, which are still stabilizing after popular revolutions.
• 7:30
  SPEAKER_00: The propensity of protests to turn violent in Bangladesh reflects the precarious situation on the ground, where rioting remains at above-average levels since 2024's monsoon revolution, even as the newly elected government attempts to restore stability.
• 7:47
  SPEAKER_00: These new governments, or those facing growing public discontent, such as in India, will not want to make the unpopular but necessary policy choices for fiscal stability, thus delaying the reckoning and increasing the risk of the immediate disruption developing into more entrenched problems.
• 8:07
  SPEAKER_00: Finally, factors over which national governments have little control could also impact recovery.
• 8:14
  SPEAKER_00: Countries that depend on tourism, such as Sri Lanka, Nepal, and the Maldives, will likely see a drop in visitors from the West, who themselves are coping with the rising cost of living.
• 8:25
  SPEAKER_00: Fears of a protracted war in the Middle East, where several South Asian migrant workers were victims of attacks in March and April, may dissuade future migration to the Gulf for work, or even prompt returns from the Gulf, impacting remittance flows and causing renewed economic shocks in countries like Nepal, which are disproportionately reliant on remittances.
• 8:47
  SPEAKER_00: The return of large numbers of young men to countries with limited employment opportunities heightens the potential for social unrest.
• 8:55
  SPEAKER_00: The knock on effects of the war are likely to be felt across the region and beyond over the long term.
• 9:02
  SPEAKER_00: This report was written by Pearl Pandia, ACLED's senior analyst for South Asia.