The conflict involving the US and Israel against Iran has significantly affected Arab countries, leading to alarming poverty rates, according to recent findings from the United Nations Development Programme (UNDP). A report released on Tuesday indicates that gross domestic product (GDP) in the region may shrink between 3.7 to 6 percent due to the month-long warfare, translating to a financial loss estimated between $120 billion and $194 billion.

Job Losses and Increased Poverty

Abdallah Al Dardari, an assistant secretary-general at the UN and director of the UNDP Regional Bureau for Arab States, highlighted that around 3.7 million jobs could be lost as the conflict unfolds. Furthermore, it is projected that an additional four million people may fall below the poverty line. Al Dardari emphasized that the ongoing war illustrates the fragility of the Arab economy.

The UNDP report is based on projections of a “short but intense” conflict expected to last approximately four weeks. However, the ramifications could intensify if hostilities continue beyond this period. Iran’s actions targeting Gulf energy infrastructure and obstructing oil and gas exports through the Strait of Hormuz have already raised concerns about further economic deterioration.

Inflation and Trade Flows

The report highlights that surging oil prices are a direct consequence of supply constraints, with Brent crude futures increasing by 4.7 percent to surpass $118 per barrel. It warns of potential risks in strategic maritime corridors leading to inflation, disruptions in trade flows, and challenges for global supply chains, all of which threaten livelihoods within interconnected Middle Eastern economies.

The increase in poverty is expected to be particularly pronounced in the Levant and in economically fragile countries like Sudan and Yemen, where existing vulnerabilities can exacerbate the impact of such shocks on welfare. The report underscores the severe challenges these areas face, making them more susceptible to economic distress.

Lebanon’s Deteriorating Situation

Lebanon, which has found itself embroiled in the conflict following Hezbollah’s retaliation against Israel for the US-Israeli assassination of Iran’s Supreme Leader Ayatollah Ali Khamenei on February 28, faces dire consequences. The ongoing airstrikes and subsequent evacuation orders have resulted in widespread destruction of residential areas, transportation networks, and essential public services, leading to significant displacement among the population.

Al Dardari expressed the hope for an immediate cessation of hostilities, noting that each day of prolonged conflict furthers negative repercussions on the global economy. The urgent call to action reiterates the pressing need for resolution to mitigate further economic decline in the region.

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