ME escalation could cost region up to $194 bln, wipe out 2025 gains

The war in the Middle East, which began on 28 February and is now in its fifth week, has expanded into a multi-front crisis with no ceasefire in sight, amid disrupted air cargo routes, oil supply lines, and rising civilian casualties.

The report warned that unemployment could rise by 1.8 to 4 percentage points, leading to the loss of 1.61 to 3.64 million jobs, more than the total number of jobs created across the region in 2025. At the same time, an additional 3.05 to 3.96 million people could fall into poverty.

Titled “Military Escalation in the Middle East: Economic and Social Implications for the Arab States Region,” the report highlighted how structural vulnerabilities in Arab economies amplify the impact of even short-term conflicts, with potentially long-lasting socio-economic consequences.

“This crisis rings alarm bells for countries of the region to fundamentally re-evaluate their strategic choices,” said Abdallah AlDardari, assistant secretary-general and director of UNDP’s Regional Bureau for Arab States.

He called for stronger regional cooperation, economic diversification away from hydrocarbons, and more resilient trade and logistics systems.

Gulf, Levant face the biggest losses

The report shows that the economic impact will vary significantly across subregions.

The Gulf Cooperation Council (GCC) countries are expected to suffer GDP losses of 5.2 and 8.5 percent, equivalent to $103 to $168 billion. In the Levant, losses are projected at 5.2 to 8.7 percent, or $17.3 to $28.9 billion.

North Africa is expected to be less affected, with growth ranging from 0.0 to 0.4 percent, equivalent to gains of $90 to $3.2 billion. The least developed Arab countries could see GDP declines of 0.1 to 0.5 percent, or $70 to $320 million.