War could wipe up to $194 billion from Arab economies, UNDP warns

A recent assessment from the United Nations Development Programme (UNDP) warns that the ongoing conflict in Iran could significantly harm the economies of Arab nations in the Middle East. The report predicts that these countries might see their GDP drop by as much as 6%. It estimates that the economic losses could range from $120 billion to $194 billion, mainly due to interruptions in energy supplies, trade routes, and financial markets, affecting areas far from the fighting. The UNDP stated, “The escalation is transforming a localized conflict into a systemic regional shock.” This situation is causing shipping volumes to decline, insurance costs to rise, and oil prices to become unstable, all of which impact interconnected economies. The effect is severe and varies by country. Gulf nations and those in the Levant are likely to be the most affected, with some experiencing a drop in output exceeding 8%. Investment and trade are decreasing sharply, while inflation and borrowing costs are increasing. Throughout the region, nearly 4 million people might be pushed into poverty as higher prices for food and energy reduce household earnings. Iran is predicted to face an even greater economic decline. The UNDP estimates indicate that its economy could shrink by up to 10%, leading millions more into poverty as the conflict disrupts its energy systems and trade.