UN warns Mideast escalation could wipe out 2025 GDP gains, push millions into poverty

United Nations: A UN report warns that the ongoing military escalation in the Middle East—now in its fifth week—could slash regional economies by 3.7% to 6% of their collective GDP, equating to losses of up to $194 billion.

This figure alone may surpass the entire cumulative GDP growth the region recorded in 2025, according to the United Nations Development Programme (UNDP) report, Military Escalation in the Middle East: Economic and Social Implications for the Arab States Region.

The fallout includes a projected unemployment spike of up to 4 percentage points—wiping out 3.6 million jobs, more than all jobs created in the region last year. This could drive 4 million people into poverty.

The report lays bare the region's deep structural vulnerabilities, where even a brief conflict triggers lasting socioeconomic damage. Impacts vary by subregion, shaped by local economic traits.

Human development, as tracked by the Human Development Index, faces a 0.2%–0.4% drop—equivalent to losing half a year to a full year of progress.

"This crisis rings alarm bells for countries of the region to fundamentally reevaluate their strategic choices of fiscal, sectoral, and social policies, representing an important turning point in the development trajectory of the region," said Abdallah Al Dardari, UN Assistant Secretary-General and UNDP Regional Director for Arab States.

He urged stronger regional ties to diversify beyond hydrocarbons, expand production, safeguard trade and logistics, and forge broader partnerships against shocks and conflicts.

Using Computable General Equilibrium modeling, the analysis simulates five escalating scenarios—from moderate trade cost hikes (10x) to extreme disruptions (100x) with halted hydrocarbon output—factoring in trade barriers, productivity dips, and capital losses.

(Inputs from IANS)