ISLAMABAD/BELA NOOR SHAH, Pakistan — On Monday (May 5), Pakistan conducted its second missile test in just three days, while India instructed several of its states to carry out security drills amid rising tensions between the two nuclear-armed neighbors following a deadly attack in Kashmir. Moody’s has warned that this standoff could hinder Pakistan’s ongoing economic recovery, even as global powers appealed for de-escalation.

Bilateral relations have sharply deteriorated after an April 22 attack in Indian-administered Kashmir killed 26 Hindu tourists — the deadliest civilian assault in India in nearly 20 years. India has blamed Pakistan for involvement in the attack, an allegation Islamabad has denied, instead claiming it has intelligence suggesting India may soon launch a military strike.

In response, both nations have closed their land borders, halted trade, and suspended airline access to each other's airspace. There have also been minor exchanges of gunfire along the Kashmir frontier. India’s interior ministry has reportedly ordered several states to hold mock security drills on May 7 to assess civil readiness. These exercises will include air raid sirens, evacuation protocols, and emergency response training. The specific states were not named, nor was any official mention of Pakistan or Kashmir made in this context.

Meanwhile, Pakistan’s military announced it had successfully tested a Fatah series surface-to-surface missile with a 120 km range, shortly after a prior test of the Abdali missile with a 450 km range. Prime Minister Shehbaz Sharif praised the tests as evidence of Pakistan’s strong defense capabilities. Information Minister Attaullah Tarar confirmed that no communication channels were currently open with India.

Kashmir remains a long-standing flashpoint between the two countries, both of which claim it entirely but control separate portions. India accuses Pakistan of backing Islamist militants in the region, while Pakistan asserts its support is limited to diplomatic and moral advocacy for Kashmiri self-determination. On the economic front, Moody’s cautioned that prolonged conflict could derail Pakistan’s $350 billion economy, especially after it narrowly avoided default last year with a $7 billion IMF bailout. The agency noted that escalating tensions could hinder Pakistan’s access to international funding and erode its foreign currency reserves.

The situation may also influence India’s economy, although its limited financial ties with Pakistan mean only an increase in defense spending could potentially slow India’s fiscal progress. In diplomatic moves, Iran’s foreign minister was in Pakistan for talks and is scheduled to visit India next. Russia expressed serious concern over the unfolding crisis and reiterated its valued relationships with both countries. Russian President Vladimir Putin also condemned the Kashmir attack and conveyed full support to Indian Prime Minister Narendra Modi in countering terrorism. Finally, Pakistan announced it would formally brief the United Nations Security Council about the situation and urge it to take steps to maintain international peace and stability.