UN Warns of Major Economic Fallout from Ongoing Middle East Conflict

In a new assessment, the agency said the combined GDP of Arab countries could shrink by between 3.7% and 6% due to the conflict. This would translate into economic losses ranging from $120 billion to $194 billion.

The report also highlighted serious labor market impacts. Unemployment could rise by as much as 4 percentage points, potentially leading to job losses for around 3.6 million people. At the same time, nearly 4 million additional people could fall into poverty. The situation is further strained by the fact that the region failed to generate 3.6 million jobs even in the previous year.

Abdallah Al Dardari, Director of the Regional Bureau for Arab States at UNDP, said the ongoing crisis could mark a turning point for the region. He emphasized the need to move away from oil-dependent growth and instead focus on economic diversification, expanding the production sector, and strengthening regional cooperation.

The report, titled “Military Escalation in the Middle East,” noted that trade costs could rise sharply due to the conflict, while production and investment may face major disruptions. Economic output in regions such as the Gulf Cooperation Council (GCC)—which includes Saudi Arabia, United Arab Emirates, Qatar, Kuwait, Oman, and Bahrain—and the Levant, including Syria, Lebanon, Jordan, Iraq, and Palestine, could decline by more than 5.2% to 8.5%.

According to UNDP, poverty is expected to rise most sharply in the Levant and in least developed Arab countries. In the Levant alone, between 2.8 million and 3.3 million people could fall below the poverty line, accounting for more than 75% of the total increase in poverty across the region.

The agency also warned that the Human Development Index (HDI) could decline by 0.2% to 0.4%, potentially setting back human development progress in the region by six months to a year.