The United States and Israel initiated their military operations in Iran nearly exactly a month ago, and this action has disrupted every market, regardless of whether one deals in equities, government bonds, or commodities like gold or, in fact, energy.
The war is currently in a minor lull, but there doesn’t seem to be any end in sight as US President Donald Trump asserts that he has prolonged the deadline for Iran to open the Strait of Hormuz and permit the passage of fuel.
Based on their relative vulnerabilities, nations are suffering the economic impact to varying degrees. For instance, the Indian rupee has depreciated significantly against the US dollar.
Currently trading at 94. 6 rupees to the dollar, the rupee has lost over 4% of its value in the last month alone.
The Indian rupee has historically lost 2 to 3% of its value versus the dollar in a year, for context. The rupee has fallen by more than 10% against the dollar over the last year as a result of the disruption caused by trade and tariffs.
The rupee has also fallen against the majority of other currencies in the last month, regardless of whether they are the euro, the British pound, the Chinese yuan, or the Japanese yen.
However, exchange rates are really symptoms, and their fluctuations point to shifts in the underlying economy.
Which economies, if any, are benefiting from this conflict, and which of the impacted economies are experiencing the worst effects?
In an effort to address this very issue, the Organisation for Economic Co-operation and Development (OECD) has published an “interim economic outlook. ”
The OECD analysis offers some fascinating findings on the topic of overall economic development, as measured by real gross domestic product (GDP) growth, even if it lacks data for two of the three nations (Israel and Iran) that are most immediately involved in the war.
The overall rate of global GDP increase may seem “resilient” (i. e. , unchanged since before the war began in December), but this status quo masks a number of changes. Brazil and India, which were already predicted to slow down in 2026, will experience a further slowdown.
The nations that are historically allied with the United States—the United Kingdom and the European Union member states—will suffer the most. Given that Europe has been mainly stagnant and frequently on the verge of a recession, the euro area is predicted to experience a 0. 4 percentage point decrease in its growth rate, which represents a dramatic slowdown.
The UK, the US’s closest ally, is even harder hit, as it left the EU in order to forge its own path and might experience a half percentage point reduction in growth.
The GDP data from the previous week Why are central banks caught between a rock and a hard place during the conflict in West Asia?
It’s remarkable that Russia and China, the two main commercial and military rivals of the United States, are expected to either remain unaffected by this conflict or even experience some economic growth, as in the case of Russia.
The most astounding finding is that the US economy will see the greatest increase in its GDP growth rate—one-third of a percentage point—as a result of this conflict. Therefore, despite the fact that its GDP growth rate was predicted to slow in 2026, the rate of slowdown will be less due to this war.
A variety of elements contributed to this unexpected outcome. First, the December projections were impacted by the slowdown in the fourth quarter of 2025, when the government shutdown brought the economy to a halt.
Two, the US economy has been more upbeat in the first quarter of 2026, thanks to tax breaks for consumers and ongoing investments from AI and technology-led companies in the US.
According to the study, the increase in energy costs will raise costs but will also encourage the production of domestic energy in the United States, which will increase GDP. The world’s top oil producer is the United States.
The primary measure is overall growth, but inflation is expected to soar as the first consequence of this war. With the exception of Saudi Arabia, which has vast oil resources within its borders, the majority of nations are predicted to experience a sharp rise in inflation.
India’s inflation, which was about 2% in 2025, is predicted to reach 5. 1% in 2026. This is a 1. 7 percentage point rise from the December outlook, which predicted an inflation rate of 3. 4%, which would have been comfortably below the RBI’s target rate of 4%.
The inflation rates in the developed world, including the United States, the European Union, and nations like Japan and Korea, are expected to increase by more than one percentage point.