Beyond the Ceasefire: A Multisector Economic Perspective on the India-Pakistan Conflict for MENA 

India and Pakistan’s recent military escalation has placed economic stability in the broader South Asia-Middle East and North Africa (MENA) corridor under significant strain. The conflict, marked by cross-border strikes and heightened military posturing, has disrupted regional capital markets, supply chains and cybersecurity frameworks. While a ceasefire was announced on May 10, 2025, following U.S.-led diplomatic efforts, the truce remains fragile with ongoing volatility and strategic uncertainty. 

This analysis consolidates insights from APCO’s practice leads across key sectors and industries. Each section provides actionable recommendations to help MENA businesses navigate potential disruptions, mitigate risks, and anticipate strategic shifts as the situation evolves. 

Risk & Crisis Management

Nicholas Labuschagne, Head of Strategy and Crisis Management, MENA 

While the ceasefire provides a temporary respite, leadership should prioritize clear, consistent internal communications to mitigate potential tensions among staff members from India and Pakistan. The tone must remain neutral, focusing on unity and organizational values. Externally, communications should remain in standby mode unless direct supply chain impacts emerge. Given the fluidity of the situation, a range of scenario-based communications plans should be prepared, emphasizing preparedness over reaction. 

Capital Markets

Fred Cornet, Head of Capital Markets, MENA 

Capital markets on both sides of the border have been volatile, with fundamentals taking a backseat during hostilities and the subsequent ceasefire announcement. In the lead-up to the ceasefire, Indian equities snapped a three-week run, and trading was briefly suspended in Karachi following a sharp drop in the main index. By midday on May 12, indices on both exchanges had rebounded strongly, erasing the prior week’s losses with Pakistan’s benchmark index turning positive on a year-to-date basis. From a broader economic outlook standpoint, the prospect of a prolonged conflict would have weighed negatively on both countries but especially on Pakistan, with Moody’s Ratings warning that recovery and fiscal consolidation efforts could be severely compromised as Pakistan is already heavily dependent on funding from development institutions. For issuers, providing investors with an up-to-date picture of possible exposure and approach to risk mitigation is essential to protect value in uncertain times. 

Energy & Commodities / Supply Chain & Logistics

Mathilda Saad, Director & Ramy Reda, Director, Infrastructure, Transportation and Defense Sectors Co-Leads, MENA 

The ceasefire has momentarily eased concerns around oil and gas price volatility, with Brent crude stabilizing after a 21% decline in 2025. However, with India’s heavy reliance on crude imports, any breach of the truce could trigger renewed disruptions, driving up prices and compounding economic strain. Meanwhile, the temporary rerouting of cargo and suspension of services to Karachi Port continue to elevate shipping costs, underscoring the need for contingency planning. 

Tech & Cybersecurity

Ben Leakey, Director 

Despite the ceasefire, cyber activity remains elevated, with 45 hacktivist groups continuing to launch distributed denial-of-service (DDoS) attacks and website defacements. While some groups have signaled a cessation of attacks in response to the truce, others have ramped up their efforts, particularly those targeting financial and government institutions. Companies should remain vigilant, reinforcing cybersecurity protocols and monitoring for retaliatory cyber actions. 

Consumer Goods & Retail

Sanaya Pavri, Director 

Brands should assess and reinforce their supply chains to mitigate risks from potential future disruptions. While immediate consumer sentiment may improve with the ceasefire, underlying uncertainties could temper spending behaviors, particularly for consumer goods brands sourcing from or distributing in South Asia. Monitoring consumer trends and maintaining agile logistics plans will be essential in the weeks ahead. 

Looking Ahead 

The ongoing India-Pakistan conflict underscores the shifting dynamics of regional power, with the United States taking a more restrained approach in mediating conflicts beyond its immediate strategic priorities. The delayed U.S. intervention during the recent escalation between the two nuclear-armed nations signals a broader recalibration of global influence, particularly as other international crises, such as the Russia-Ukraine war and the war in Gaza, demand more immediate attention. With two nuclear powers engaging in sustained direct confrontation, the reliability of nuclear deterrence as a stabilizing force in South Asia is now under scrutiny. 

For MENA markets, the implications are multifaceted. Given their significant economic and geopolitical ties to India and Pakistan, the United Arab Emirates (UAE) and Saudi Arabia are compelled to reassess their strategic roles. With Jebel Ali Port serving as a critical hub for indirect trade between the two nations, the UAE faces potential supply chain disruptions that could directly impact its economic interests. Meanwhile, with strong defense and security ties to Pakistan and robust trade relations with India, Saudi Arabia is equally invested in ensuring regional stability to safeguard its broader economic partnerships and oil exports. 

While the ceasefire provides temporary relief, it does not resolve MENA businesses’ deeper economic and geopolitical uncertainties. Companies must remain agile, implementing scenario-based contingency plans to mitigate potential disruptions in capital markets, supply chains and business operations. With both direct and indirect risks at play, proactive communication, strategic foresight and rapid response capabilities will be essential to navigate the evolving landscape.