COVID to conflict, The common man bears the brunt:Markets down, daily life gets tougher; West Asia tensions worry common people

The US–Israel–Iran war has flipped the global economic script, dragging the world back to a COVID-like phase of uncertainty. Economies across the globe are bearing the brunt of the West Asia conflict, with inflation surging sharply. Stanford economist Nicholas Bloom warns that this situation is fuelling a K-shaped recovery—where the rich continue to get richer while the poor fall further behind. Rising inflation and unemployment are making it increasingly difficult for the common man to meet basic needs, reinforcing this divide. Before COVID (Jan 2020): The Nifty 50 was doing very well and reached a high of around 12,430.
In short: The market fell very fast due to fear, but also recovered quickly once things started stabilising. Just before the Israel- US attack on Iran On February 28, 2025, the stock market fell sharply. The Sensex dropped over 1,400 points and the Nifty 50 fell by more than 400 points in a single day. Because of this fall, the market ended its fifth straight month of losses — something that hasn’t happened in nearly 30 years. Indian indices registered the biggest 1 day loss of the year on Thursday 19th March, Nifty lost over 700 points. In short: investors were nervous, sold their shares, and the market crashed significantly. The Indian Rupee is weakening, while the NSE Nifty has already seen, and may continue to see, volatility as investors pull out capital. Experts say Markets will recover once the war ends, just like it did after the covid crash. To understand it better we spoke with Dr Kadira Pethiyagoda, geopolitical strategist and former political advisor Q- Are we heading toward a COVID-like economic slowdown due to the ongoing West Asia tensions?

The US central bank has decided not to change interest rates again, keeping them at the same level as before. This was expected, but the decision comes at a time when oil prices are rising due to tensions between the US, Israel, and Iran, which could make things more expensive and increase inflation. Even though President Donald Trump has been pushing for lower interest rates to make borrowing cheaper, the central bank is being careful. That’s because the economy is showing mixed signals — prices are rising, but the job market isn’t very clear. In short, the bank is waiting and watching before making any big moves. Q- How is the US–Israel–Iran conflict reshaping global markets and investor confidence? A- The price of energy – both oil and gas – will likely continue to rise and not return to pre-war levels for quite some time, if ever. Damage to Gulf energy facilities will take years to repair. This will particularly impact Europe and Asia. The Trump Administration is trying to reassure markets about oil supply safety in the Strait of Hormuz, but investors remain unconvinced, and global investor confidence is weakening. The war’s long-term impact could significantly reshape the world’s energy system. But, the situation has become more serious after the Strait of Hormuz—one of the world’s most important routes for transporting oil—was shut down by Iran. This route is like a lifeline for global fuel supply, so its closure has disrupted oil movement across the world and pushed prices up sharply. Because of this, petrol and diesel prices have started rising in many countries. Data shows that at least 85 countries have already seen fuel prices go up, and even more may see increases in April. Some countries are already feeling the heat more than others. Cambodia has seen petrol prices shoot up by nearly 68%, one of the highest increases so far. – To cope with rising fuel costs and save energy, governments are taking unusual steps:
Even though the war is happening about 3,000 km away from India, its impact is now being felt in daily life—especially in things like fuel prices and cooking gas shortages, which are affecting homes and restaurants alike. The government has increased the prices of domestic and commercial cylendars by ₹ 60. There’s a shortage of LPG (cooking gas) across the country. People are standing in long lines to refill cylinders. Restaurants are struggling the most—many have reduced their menus, cut working hours, or even shut down temporarily because they can’t get enough gas. Q- How is the current crisis exposing India’s dependence on imported energy? A- Of the four states that can be described as Great Powers or emerging Great Powers, India is the most reliant upon imported energy from West Asia. Therefore, as I have argued before, it is in India’s security and economic interest to seek to take on the role of mediator in this war. India depends a lot on imports for LPG—around 60% comes from other countries. Most of it travels through a narrow sea route called the Strait of Hormuz, which is now under tension due to the conflict. That’s why supply has been disrupted. To manage the situation, the government is increasing gas production within India and giving priority to homes, hospitals, and schools. This means hotels and other commercial users are getting less supply. Q- What lessons from the COVID-19 pandemic market crash can help investors navigate current volatility? A- The current volatility is more geopolitical in nature than COVID and thus information is filtered by governments with their own interests etc. Investors should draw on a range of sources in making decisions. Indian media which has notably taken a more objective approach.
There is some good news though—India recently received two LPG shipments safely after Iran allowed them to pass. These ships brought about 46,000 tonnes of cooking gas. A cargo ship carrying liquefied petroleum gas (LPG) from Texas, US, arrived at Mangalore Port on Sunday. Meanwhile, a ship from Russia carrying crude oil also reached India. In the past seven days, around five ships carrying gas and crude oil have reached India by sea, which should give temporary relief. When asked how long the war will continue and what its future looks like, Dr. Kadira Pethiyagoda said
A- This war will likely continue for at least another 5-7 weeks given the mutually exclusive goals on either side. The US goals are influenced by Israel which seeks to trigger at the least regime-change, but potentially state failure or balkanization of Iran. Iran seeks to ensure the US and Israel can not launch such an attack again, meaning it wishes to change the political calculations within Israel and evict the US from the Gulf. It also seeks enormous compensation for the war. There is, however, one variable that is difficult to predict: the reaction of the Israeli public to sustained bombardments from Iran. This is unprecedented in the Israeli experience and may see pressure upon their own government to end the conflict.
It’s been almost four weeks since the war started. The US and Israel have caused heavy damage to Iran, but Iran has also hit back strongly. It has carried out attacks on several US-linked targets in the region and even targeted military bases. According to Iran’s consulate in Mumbai, the aircraft had entered Iranian airspace near the country’s southern coast, after which it was intercepted and targeted with a surface-to-air missile. Meanewhile, US President Donald Trump has warned Iran that it must ‘fully open’ the strategically vital Strait of Hormuz within 48 hours or face major US military strikes targeting its power infrastructure. It would be better for the whole world if this war ends as soon as possible, so things can return to normal and ordinary people can afford their basic needs again.