The following steps may help:
If you have not yet done so, update your iPhone and Apple Watch to the latest software, starting with your iPhone:
Unpair your iPhone from a Bluetooth headset, if one is presently paired to it.
Restart both your iPhone and your Apple Watch, turning both devices off together, then restarting your iPhone first:
If you are using a case or other protective accessory on your Apple Watch, then it may help to remove it.
Check the speaker and microphone ports for any wrapping or debris:
If the issue persists, then I suggest that you contact Apple Support (remote diagnostics and/or mail-in service may be available, if required), make a Genius Bar reservation or visit an Apple Authorised Service Provider for assistance: