Arab economies to face $194bn loss amid Iran conflict: UN

The ongoing US and Israel-led military action against Iran could trigger severe economic disruption across Arab nations, with losses estimated between $120 billion and $194 billion, the United Nations Development Programme (UNDP) warned Tuesday (March 31).

According to a new UNDP study, the conflict that began in late February may shrink Arab economies by 3.7 to 6 per cent, pushing millions into poverty.

The report highlights that even a limited conflict can ripple through trade, energy, and financial sectors, while rising uncertainty could sharply reduce investment. Disruptions to shipping and higher transportation costs are expected to hamper imports and exports, particularly affecting countries in the Gulf and Levant regions.

The UNDP cautioned that if hostilities escalate, an additional 4 million people could fall below the poverty line, with 2.5–3.5 million losing jobs and unemployment among low-skilled workers rising to 4.5 per cent. Inflation may surge in import-dependent nations, while countries in North Africa exporting oil could see relative economic relief due to higher prices.

The organisation also warned that human development indicators across the region may also decline by a year.

Since February 28, US and Israeli strikes on Iran have reportedly killed around 2,000 people, including former leader Ali Khamenei. Iran has retaliated with drone and missile attacks on Israel, Jordan, Iraq, and Gulf nations hosting US forces, and has closed the Strait of Hormuz to foreign passage, disrupting global oil shipments and air traffic.