The countries with the least resources feel everything first.
Six months into a war that was expected to be brief, Asia finds itself confronting a second and more punishing wave of economic disruption — one its governments were never equipped to sustain. The closure of the Strait of Hormuz severed the region's energy lifeline, and the emergency measures deployed in the early weeks have now run their course, leaving nearly nine million people at risk of poverty and the broader region facing losses that may reach $299 billion. What began as a crisis of supply has become a crisis of governance, equity, and endurance — a reminder that the most vulnerable are always the first to absorb what the powerful cannot contain.
- Six months of war have drained Asia's emergency reserves, subsidies, and political goodwill, leaving governments with no remaining buffer against rising oil prices that have climbed from $70 to $120 a barrel.
- The human toll is sharpening fast — 8.8 million people across the region stand at the edge of poverty, while farmers, tourists, workers, and households absorb cascading shocks from fuel shortages and soaring costs.
- Governments are trapped between two painful choices: maintain subsidies and risk fiscal collapse, or cut them and ignite public anger and inflation — a dilemma analysts are calling a 'fiscal time bomb.'
- Countries like Pakistan and Bangladesh, already short on foreign currency, are being forced to buy energy at volatile spot prices, while India redirects fuel from fertilizer to cooking gas, threatening its own food supply ahead of a weak monsoon season.
- Even after the conflict ends, recovery is expected to be slow and uneven — infrastructure repairs, supply chain restoration, and restarting production could take months, with Southeast Asia identified as the region under the most acute and worsening pressure.
When the Strait of Hormuz closed and oil stopped flowing, Asia's governments moved quickly — deploying fuel subsidies, drawing down strategic reserves, rationing power — betting the war would be short. It was not. Six months on, those first-line defenses are gone, and a second, more damaging wave of economic shock is now moving through the region. The International Development Program estimates 8.8 million people face poverty risk, and total losses across Asia and the Pacific could reach $299 billion.
The early choices were brutal in their logic. Governments diverted fuel from fertilizer plants to keep cooking gas flowing to households. They drained reserves. They cut power to slow businesses. But these were stopgaps, not solutions. As Brookings analyst Samantha Gross observed, those with the fewest resources — governments and consumers alike — feel the pressure first and feel it hardest.
The consequences are now visible country by country. India, to secure cooking gas for 330 million households, redirected fuel away from fertilizer production — and now, with a weak monsoon forecast, rice farmers face a dangerous squeeze. Prime Minister Modi is asking citizens to work from home and halve fertilizer use. The Philippines shifted to a four-day work week. Thailand abandoned its diesel price cap within weeks. Vietnam cut jet fuel supplies, threatening a tourism sector worth nearly 8% of its economy. A Hanoi tour guide captured the mood plainly: business is not good, and the tourists are already fewer.
At the center of the crisis is an impossible fiscal choice. Governments can sustain subsidies only by cutting welfare spending or borrowing more — risking inflation. Or they can remove subsidies and face public backlash. Poorer nations like Pakistan and Bangladesh, unable to rely on long-term energy contracts, are buying oil and gas at volatile spot prices, draining foreign currency reserves with every barrel. Every dollar spent on energy is a dollar taken from somewhere else.
The ripple effects are spreading through daily life — higher airfares, rising shipping costs, climbing utility bills, slowing urban economies. Asia's growing middle class, many households just one or two shocks from poverty, is proving more fragile than its recent prosperity suggested. Longer-term debates about nuclear power, solar energy, and supply diversification are underway, but offer no near-term relief. And even when the war ends, recovery will be slow — infrastructure repairs, restarted production, and restored shipping lanes could take months. Southeast Asia, analysts warn, remains the region's sharpest pain point, and the situation is likely to worsen before it turns.
The Strait of Hormuz closed. Oil stopped flowing. Asia's governments reached for their emergency tools—fuel subsidies, power rationing, strategic reserves—and bought themselves time. They were betting the war would be short. It wasn't.
Now, six months into the conflict, those first-line defenses are exhausted. The temporary measures that governments designed to weather a crisis lasting weeks or months have become unsustainable. A second, more damaging wave of economic shock is moving through Asia, and there is no clear end in sight. The International Development Program estimates that 8.8 million people across the region face the risk of falling into poverty. The total economic damage to Asia and the Pacific could reach $299 billion.
When the war began, Asian governments made hard choices. They cut power to slow businesses. They diverted fuel from fertilizer plants to keep cooking gas flowing to households. They drained strategic oil reserves. These were not long-term solutions. They were stopgaps, predicated on a quick return to normal. "The countries with the least resources to respond, or the consumers who can least afford to pay, are the ones who feel everything first," said Samantha Gross, an analyst at the Brookings Institution. The math was brutal: governments had budgeted for oil at around $70 a barrel. Brent crude climbed to $120. The gap had to come from somewhere.
India offers a stark example of how the second wave is unfolding. To secure cooking gas for 330 million households, the government redirected fuel away from fertilizer production. Now, as meteorologists warn of weak rainfall in an El Niño year, fertilizer prices are surging and India's rice farmers face a squeeze. Prime Minister Narendra Modi has begun asking citizens to work from home, use public transit, and cut travel abroad to conserve fuel. He has asked farmers to halve their fertilizer use. The Philippines shifted to a four-day work week. Thailand abandoned its diesel price cap within weeks of the conflict's start, as subsidies ran dry. Vietnam cut jet fuel supplies, slashing flights and threatening tourism, which accounts for nearly 8% of the country's economic output. A tour guide in Hanoi named Nguyen Manh Thang put it simply: "Business is not good right now. There are already fewer tourists."
The core problem is this: governments face an impossible choice. They can maintain fuel subsidies, but only by cutting spending on welfare and other priorities, or by borrowing more and risking inflation. Or they can cut subsidies, pass higher costs to consumers, and risk public anger. "Once subsidies are exhausted and inflation starts to rise, countries could face what he called a fiscal time bomb," according to Ahmad Rafdi Endut, an independent energy analyst in Kuala Lumpur. Poorer nations like Pakistan and Bangladesh, already strapped for foreign currency, have been forced to buy oil and gas at volatile spot prices rather than the cheaper long-term contracts they once relied on. Every barrel costs more. Every dollar spent on energy is a dollar not spent elsewhere.
The ripple effects are already visible in daily life. Airfare costs are climbing. Shipping rates are rising. Utility bills are higher. Business activity is slowing in major cities. The fragility of Asia's growing middle class is being exposed—many households are just one or two shocks away from poverty. The crisis is also reshaping how countries think about energy security. Governments are debating nuclear power, solar development, and diversifying away from Middle Eastern suppliers. But these are long-term plays. In the near term, there is no relief coming.
Even when the war ends, recovery will be slow. Damaged infrastructure must be repaired. Production facilities must restart. Oil and gas must travel from the Middle East to Asian ports. Experts estimate this process could take weeks or even months. Europe, with its own energy alternatives, will feel the impact with roughly a four-week lag. But Southeast Asia, according to analysts at the Eurasia Group, is currently the "biggest pain point." The situation, they warn, is likely to worsen before it improves. The longer the conflict persists, the deeper the damage to growth and stability across the region.
Citas Notables
The countries with the least resources to respond, or the consumers who can least afford to pay, are the ones who feel everything first.— Samantha Gross, Brookings Institution
Business is not good right now. There are already fewer tourists.— Nguyen Manh Thang, tour guide in Hanoi
La Conversación del Hearth Otra perspectiva de la historia
Why couldn't governments have planned for a longer conflict from the start?
Because energy crises are usually short. A refinery fire, a pipeline rupture, a brief political flare-up—these resolve in weeks or months. No government budgets for indefinite disruption. They made rational bets based on history.
So the poorest people feel it first?
Always. A wealthy household can absorb higher fuel costs. A poor household has to choose between cooking gas and fertilizer for crops, or between electricity and medicine. When subsidies end, they have nowhere to hide.
India is asking farmers to use half the fertilizer. What happens to the harvest?
That's the question no one wants to answer yet. Weak rainfall is already forecast. Less fertilizer means lower yields. For a rice exporter feeding much of the world, that's not just an Indian problem.
Can't countries just switch to renewable energy?
In theory, yes. In practice, solar panels and wind turbines take years to build and billions to finance. When you need fuel today, you can't wait for tomorrow's infrastructure.
What's the "fiscal time bomb" that analyst mentioned?
It's when subsidies run out, inflation takes hold, and governments have no good options left. They've already borrowed heavily. They've already cut welfare spending. At that point, the only choice is to let prices rise and hope the economy doesn't break.
When does Asia start to recover?
Not quickly. Even after the war ends, it takes months to repair facilities, restart production, and move oil across oceans. By then, the damage to jobs, savings, and trust in institutions will already be done.