Economists at Standard Chartered warn that the ongoing Middle East conflict could disrupt global remittance flows and broader economic activity, with potential ripple effects for growth, inflation and financial markets worldwide.
GCC at the center of global remittance flows
Economists Madhur Jha and Ethan Lester at Standard Chartered highlight the Gulf Cooperation Council (GCC) as a key remittance hub for several emerging economies, including Egypt, Pakistan, the Philippines, Bangladesh and Sri Lanka. These countries are heavily reliant on money sent home by workers in the Gulf.
If geopolitical tensions in the region persist, the report warns that these economies face the risk of weaker remittance inflows, which could strain their external accounts and weigh on domestic demand.
Energy price shock seen as main near-term threat
Standard Chartered identifies an energy price shock as the largest short-term risk to global economic growth. The bank cautions that if oil and gas prices stay elevated, global output could slip into recession.
The risk is magnified by already visible disruptions to oil and gas supply routes, which are slowing industrial production across Asia. The March consumer price index has already risen to 3.3% year-on-year, with the report linking much of this increase to higher energy costs.
Strait of Hormuz remains critical chokepoint
The economists stress that the Strait of Hormuz remains a vital corridor for oil, gas and other commodities, with about 20% of global petroleum liquids consumption passing through the waterway.
Any significant supply interruption there, they warn, could:
- Disrupt downstream manufacturing chains worldwide
- Push up trade and transport costs
- Worsen fiscal balances in energy-importing regions if the shock is sustained
Recent weeks have provided a preview of such risks. Brent crude, the international oil benchmark, climbed from around $70 a barrel before the conflict to temporary peaks above $100, feeding directly into higher inflation readings.
Remittance experience during covid-19 offers context
Jha and Lester compare today’s risks with what occurred during the covid-19 pandemic. Early in the pandemic, forecasts pointed to a 20–40% collapse in global remittances. In reality, remittances fell just 2.4% year-on-year in 2020.
The smaller-than-expected decline was helped by relatively resilient wages in exporting economies and strong migrant networks that kept transfers flowing. This history shows that remittances can remain robust even during severe global shocks, provided migrant employment and income are not hit as hard as feared.
Current disruption still below pandemic levels
So far, the economists do not see non-oil economic disruption on the same scale as during covid-19. There is little evidence of a large-scale withdrawal of expatriate workers from GCC countries at this stage.
However, they caution that a prolonged or escalating conflict could increase the likelihood of workforce relocations. That, in turn, could depress remittance volumes and create balance-of-payments pressures for major recipient economies.
Their assessment underlines how economic ties between the Gulf and emerging markets in Asia and Africa form a “delicate web,” where geopolitical shocks in one region can send financial aftershocks across continents.
Market volatility reflects rising geopolitical and macro risks
The conflict is also feeding through to financial markets, particularly more speculative assets. Periods of geopolitical instability have historically been associated with higher volatility, as traders reassess growth prospects and risk appetite.
When reports of military action in the region first surfaced, Bitcoin briefly dropped toward $60,000 before rebounding. Despite the heightened uncertainty, the report notes that digital assets have shown signs of resilience.
As of mid-April 2026, Bitcoin was trading around $75,000, and total cryptocurrency market capitalization was consolidating near $3.5 trillion, supported in part by rising institutional participation. This pattern suggests markets are reacting to short-term shocks but still assigning weight to longer-term structural trends.
Higher energy prices complicate central bank decisions
Sustained high energy prices would not only slow global growth but also complicate monetary policy. Standard Chartered’s economists point out that elevated inflation makes it harder for central banks to justify cutting interest rates.
That, in turn, can influence the flow of capital into riskier assets, including equities and digital tokens. Traders are therefore watching energy price moves and inflation data closely as direct indicators of the conflict’s economic impact and as signals for future policy shifts.
Cautious positioning amid uncertainty
Against this backdrop, the analysis suggests that market participants should:
- Review exposure to assets that are highly sensitive to global trade and growth downturns
- Recognize that while some digital assets are seen by some as potential hedges against inflation or instability, they have not been immune to broad risk-off episodes
- Focus on underlying fundamentals rather than reacting to headlines or short-term price swings
The overarching message from Jha and Lester is that a prolonged Middle East conflict would raise the odds of a global slowdown via higher energy prices and disrupted trade, while also posing a more targeted but serious threat to remittance-dependent economies tied to the GCC.
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