Gulf Corridor and Macroeconomic Vulnerability: A Scenario-Based Stress Test
DOI:
https://doi.org/10.59926/jodprp.vol10/2026/1Keywords:
Geopolitical Risk, Remittances, Stress Testing, Energy Shocks, Macroeconomic Vulnerability, Policy Responses, South AsiaAbstract
This study explores how a hypothetical Gulf-centred geopolitical crisis may affect Pakistan’s macroeconomic fragility, as well as that of Bangladesh, Sri Lanka, India, the Philippines and Bhutan. The paper brings together remittance exposure from Gulf Cooperation Council (GCC) countries, energy import, shipping, export demand, foreign exchange, inflation, reserve, policy rate, and growth channels in a bounded Macroeconomic Vulnerability Index. Governance-fiscal fragility is conceptualised as an amplifier that separates direct exposure from state absorptive capacity. Under the reported asymmetric shocks, Pakistan has the highest adjusted vulnerability, followed by Sri Lanka; Bangladesh and India are in the middle, while the Philippines and Bhutan have the lowest vulnerability scores. The paper introduces a policy-oriented stress-testing framework of remittance-energy-logistics vulnerability. These comparative results remain conditional on the assumed shocks and calibration. The study is not meant for forecasting but for assessing the extent of vulnerability under hypothetical geopolitical shocks.
JEL Classification Codes: F24; F51; F41; C63; H63
Conflict of Interest: The authors declare no conflict of interest.
Acknowledgement: The views and opinions are those of the authors and do not represent the views of any institution.
AI Declaration/Use of Generative AI: No AI tools were used in this study.
Funding: No
Article History
Submitted: 15 June 2026; Last Revised: 15 Oct. 2026; Accepted: 26 Oct. 2026
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Copyright (c) 2026 Dr Syed Muhammad Salman , Abdul Mateen
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