China emerged largely unscathed at a time when the West Asia war battered nearly every major emerging market economy through higher energy prices and their ripple effects. The dragon retained its top rank on Mint’s Emerging Markets Tracker (EMT) for March 2026.
India, by contrast, slipped three places to sixth as the conflict intensified rupee depreciation, foreign outflows and export weakness.
The divergence underscores a widening gap in external-sector stability. China delivered the strongest currency and stock market performance among emerging markets, lifting its overall score on seven high-frequency indicators to 71 (out of 100). India scored 61, with its export performance turning the second-worst after Russia. Weak currency and stock market readings further dragged down its ranking.
India’s vulnerability was visible even before the March shock. After holding the top rank in the first half of 2025, India’s standing started to fluctuate from August 2025 even as gross domestic product (GDP) growth and stood the strongest among the EMs. The weakness was entirely external, with export performance remaining volatile.
Launched in September 2019, Mint’s Emerging Markets Tracker compares 12 emerging market economies using seven high-frequency indicators: real GDP growth, manufacturing PMI, export growth, retail inflation, import cover, exchange rate movements, and stock market performance.
March intensified these pressures.
As Brent crude crossed $100 per barrel, the impact fed directly into external balances. For an economy that imports 85% of its oil, the shock was immediate. The rupee weakened to an average of ₹92.8 per dollar during the month (after hitting a low of ₹94.8 per dollar in the final days of the month), and (FPIs) pulled approximately ₹1.8 trillion from Indian equities in the month.
Furthermore, surging war-risk insurance premiums for Gulf shipping raised transaction costs along key trade routes.
The divergence
China’s lead came as its currency appreciated 0.1% month-on-month in March, which made it stand out. Stock market capitalization declined 1.6% m-o-m, but it was the smallest decline compared to other economies that saw 1.8% to 13.1% decline.
India, meanwhile, saw its currency weaken 2.3% and stock market capitalization fall 8.8%.
Its structural exposure magnified the impact. India’s heavy dependence on West Asian crude and reliance on Suez Canal trade routes make it particularly sensitive to regional disruptions. Merchandise exports contracted 7.4% year-on-year in March — the key factor tipping its ranking downward.
That created room for others to advance. Vietnam climbed to second place on the back of double-digit export growth. Malaysia and Thailand also improved their positions, reflecting balanced performance across trade and financial indicators. At the bottom, Russia and Türkiye remained under severe pressure, weighed down by weak currencies and financial instability.
Domestic resilience
Despite the external squeeze, India’s domestic indicators remain resilient. While fell, domestic consumption indicators stayed positive.
Passenger vehicle sales rose 14.1% year-on-year in March, two-wheeler sales grew 19.3%, and GST collections increased 2.1%.
However, production-side cracks are appearing. Infrastructure output contracted 0.4% year-on-year in March, reversing from an average expansion of 4% in the preceding three months. Fertilizer production fell 24.6%, reflecting rising input costs and supply chain disruptions.
The most acute pain was visible along specific trade corridors. According to Nomura, shipments to key such as Saudi Arabia and the UAE dropped by as much as 58% in March. Disruptions in the Persian Gulf also pushed up freight costs and delayed shipments, hurting Indian exporters more than Southeast Asian peers that rely on Pacific routes.
The outlook
The March data signals EM performance is now being defined by a country’s exposure and resilience to the war. As the West Asia shock permeates financial markets, external performance measured by currency stability, capital flows, and trade flows has become the decisive factor.
If oil prices remain elevated and persist, these external pressures will likely become a headwind for months to come. A report by Nomura notes that supply-side disruptions, including natural gas shortages and maritime hurdles, are expected to slow India’s near-term GDP growth to 6.3-6.7% year-on-year in the first half of FY27, compared to 7.6% rise estimated for FY26. Higher import bills will strain current accounts, while a strong dollar could sustain currency weakness and capital outflows.
Beyond the immediate trade hit, Nomura warns that pipeline price pressures are rising and input costs are picking up faster than output prices, which could eventually squeeze corporate margins if the conflict prolongs. In this environment, the new benchmark for India is going to be about how well it can weather a storm that is rippling through the world.