An India vs Pakistan war would significantly affect trade and economic activity between the two countries—and potentially have wider regional and global impacts. Here’s how:
1.
Bilateral Trade Disruption
Complete Halt in Trade: Direct trade between India and Pakistan would likely stop immediately. Even under normal circumstances, bilateral trade is limited due to political tensions, so war would shut down even informal or indirect channels.
Border Closures: Land trade routes, such as the Wagah border, would be closed.
2.
Impact on Regional Trade
South Asia Region: Countries like Afghanistan, Iran, Bangladesh, and Sri Lanka might see disruptions in supply chains or increased freight costs.
Transport & Shipping Routes: If the conflict affects Arabian Sea routes or major ports (like Karachi or Mumbai), it could impact global shipping lanes and trade flow.
3.
Currency Devaluation
Both Indian Rupee (INR) and Pakistani Rupee (PKR) could fall sharply in value due to investor fear and reduced foreign confidence.
4.
Stock Markets Crash
Stock markets in both countries would experience sharp declines. Investors would pull out due to uncertainty and risk.
5.
Foreign Investment and Business Confidence
Foreign direct investment (FDI) would decrease, especially in Pakistan, and MNCs might pause or withdraw operations temporarily from both nations.
6.
Global Commodity Prices
Oil prices could rise if the war affects sea routes or leads to broader instability in the region, especially near the Middle East.
7.
Long-Term Economic Damage
War expenditures would drain national budgets, redirecting funds from development to defense. Post-war recovery takes years and affects infrastructure, job markets, and industries.
