It is almost exactly a month since the United States and Israel started their military campaign in Iran — a move that has upended all markets, whether one trades in stocks, government bonds or commodities like gold or indeed, energy.

The war is currently in a state of slight lull as US President Donald Trump claims he has extended the deadline for Iran to open the Strait of Hormuz and allow the passage of fuel, but it appears nowhere near a resolution. Countries are bearing the economic brunt on a spectrum, based on their respective vulnerabilities. The Indian rupee, for instance, has rapidly lost value against the US dollar. In just the past month, the rupee has lost almost 4% of its value and is trading at 94.6 rupees to a dollar.

For perspective, the Indian rupee has historically lost 2 to 3% of its value against the dollar in a year. Over the past year, as trade and tariffs played havoc, the rupee has lost more than 10% against the dollar. Over the past month, the rupee has also lost against most other currencies as well — be it the Chinese yuan, Japanese yen, the euro, or the British pound (see CHART 1).

But exchange rates are essentially symptoms, their movement suggests changes in the underlying economy. So which economies, if any, are the winners of this conflict and, amongst those that are getting hit, which are getting hit the most? The Organisation for Economic Co-operation and Development (OECD) has released an “interim economic outlook” attempting to answer this precise question.

On the question of overall economic growth, measured by growth in real gross domestic product or GDP, the OECD analysis throws up some very interesting results, even though it does not provide data for two of the three countries (Israel and Iran) most directly involved in the conflict.

TABLE 1 shows that while the global GDP growth rate may appear “resilient” (read unchanged since before the start of the war in December) on the whole, this status quo hides a lot of changes. Countries such as India and Brazil, which were already expected to decelerate in 2026, will lose another sliver of pace.

The biggest losers will be the traditional US allies — European Union countries and the United Kingdom. The euro area is expected to lose as much as 0.4 percentage points of growth rate, which makes for a sharp deceleration given that Europe has largely stagnated and often teetered on the brink of a recession. The UK, which left the EU to chart its own destiny and is the US’s closest ally, is hit even worse, standing to lose half a percentage point of growth.

It is quite remarkable that the two biggest military and trade adversaries of the United States, Russia and China, are likely to either be unaffected by this war or, as in Russia’s case, get a bit of growth boost.

Finally, the most remarkable result is that the US’s GDP growth rate will actually get the biggest boost from this conflict, one-third of a percentage point. So while its GDP growth rate was set to moderate in 2026, the degree of deceleration will be lower now, thanks to this conflict.

This surprising result is a mix of several factors. For one, the December estimates were influenced by the slowdown in the last quarter of 2025 when growth stalled because of the government shutdown. Two, in the first quarter of 2026, the US economy has been more upbeat, driven by tax cuts for consumers and sustained investments from AI and technology-led businesses in the US.

The report notes that while the spike in energy prices will make things more costly, it will also incentivise domestic energy production in the US, thus boosting GDP. The US is the biggest oil producer in the world.

While overall growth is the key metric, inflation is likely to spike as the first effect of this conflict. But barring Saudi Arabia (which has rich domestic oil reserves), most countries are likely to face significant spikes in inflation. India’s inflation, which was around 2% in 2025, is likely to spike to 5.1% in 2026 — an increase of 1.7 percentage points from the December outlook when observers pencilled in an inflation rate of 3.4%, which would have been comfortably below the RBI’s target rate of 4%.

Across the developed world — the US, EU and countries such as Japan and Korea — are likely to see their inflation rates move up by well over 1 percentage point.