As the ongoing Iran war rattles the Middle East, a quieter but potentially devastating economic ripple is emerging across South Asia: the risk to billions of dollars in remittances sent home by migrant workers in the Gulf.
Millions of workers from India, Pakistan and Bangladesh form the backbone of Gulf economies, employed across construction, hospitality, healthcare and services.
In return, they send vast sums back home, funds that sustain households and underpin national economies. Any prolonged disruption to Gulf economies now threatens to destabilize this critical financial lifeline.
The stakes are enormous. India alone received a record $135 billion in remittances in 2025, with nearly 40% coming from Gulf Cooperation Council (GCC) countries.
Pakistan and Bangladesh are similarly dependent, each receiving tens of billions annually, much of it from workers in the same region. These inflows help finance trade deficits and support foreign exchange reserves, acting as a crucial economic buffer.
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However, the intensifying conflict, marked by missile and drone strikes on Gulf infrastructure and disruptions to oil and gas transit through the Strait of Hormuz, is beginning to strain the very economies that employ these workers.
The broader war has already triggered energy shocks, supply chain disruptions and fears of global recession, placing additional pressure on Gulf states.
For now, remittance flows remain largely stable. Analysts say the conflict has not yet lasted long enough to significantly affect migrant employment or wage flows.
But the outlook darkens if hostilities persist. A prolonged war could hit key sectors like tourism and aviation, major employers of South Asian labor, leading to job losses and declining remittances.
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A short conflict could reduce Gulf GDP by 1–2%, translating into a roughly 5% drop in remittances. But if the war extends beyond several months and damages energy infrastructure, Gulf economies could shrink by up to 15%, with remittances plunging by as much as 30%.
Beyond economics, there is also a human cost. Migrant workers, often living in densely populated accommodations, face growing safety risks from ongoing strikes. Civilian casualties have already been reported, including South Asian workers caught in attacks.
Despite the dangers, most workers are staying put, driven by economic necessity. For many families back home, remittances are not just income, they are survival.
*Based on DW’s report.
