An LPG gas tanker at anchor as traffic is down in the Strait of Hormuz, amid the U.S.-Israeli conflict with Iran, in Shinas, Oman, March 11, 2026. REUTERS
The United Nations Development Programme (UNDP) warned on Monday that the ongoing war by the United States and Israel against Iran could result in a significant economic setback for the Middle East, with Arab nations potentially losing up to $200 billion in economic growth.
The ongoing conflict has already driven up global energy prices, further straining the global economy. An earlier UN report highlighted that the effective closure of the Strait of Hormuz has contributed to rising food and fertiliser prices. This trend is expected to disproportionately affect poorer nations.
In a report issued today, titled ‘Military Escalation in the Middle East: Economic and Social Implications for the Arab States region‘, the UNDP warned: “At the regional level, GDP is estimated to decline by approximately 3.7-6%, equivalent to a contraction of roughly $120-194b (in constant 2015 USD), with investment contracting more sharply, reflecting heightened uncertainty and reduced capital formation.”
The report warned that even if the military escalation ended quickly, the socio-economic consequences for the region would be profound. The overall loss could lead to a rise in the regional unemployment rate by as much as four percentage points, resulting in the loss of approximately 3.6 million jobs. Additionally, it was estimated that up to 4m people could be pushed into poverty due to the economic downturn.
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Abdallah Al Dardari, the UN assistant secretary-general leading the UNDP Arab states bureau, described the situation as a “crisis” that was raising alarm bells for countries in the region.
The Gulf Cooperation Council countries and the Levant were expected to be particularly hard hit, with each region projected to lose more than 5.2% of its GDP.
