A recent report by the United Nations Development Programme (UNDP) estimates that the ongoing conflict involving the United States and Israel against Iran could cost Arab nations between $120 billion and $194 billion in GDP. The study warns of significant job losses and a potential increase in poverty across the region.
The report indicates that the conflict, which began on February 28, may have severe economic and social repercussions for Arab countries, even if hostilities conclude relatively quickly. The authors caution that a short-term escalation in the Middle East could lead to profound and widespread socio-economic consequences throughout the Arab states.
According to UN estimates, the total economic losses could elevate regional unemployment by four percentage points, translating to approximately 3.6 million jobs lost and placing an additional four million individuals at risk of poverty.
“This crisis is alarming for the countries in the region,” stated Abdalla Al-Dardari, UN Assistant Secretary-General and head of the UNDP Regional Bureau for Arab States.
The Gulf Cooperation Council (GCC) and Levant countries are projected to experience the most significant impacts, with losses potentially exceeding 5.2% of GDP in each region. One major factor contributing to these economic challenges is the effective closure of the Strait of Hormuz, which has already restricted oil and gas exports from Qatar, Kuwait, Saudi Arabia, and the United Arab Emirates.
Goldman Sachs has estimated that if the conflict persists until the end of April, the GDP of Qatar and Kuwait could decline by 14% this year, marking the most severe economic downturn for these nations since the early 1990s, when Iraq’s invasion of Kuwait triggered the Gulf War.
Saudi Arabia and the UAE are expected to manage the crisis somewhat better due to their ability to partially reroute oil flows away from the Strait of Hormuz. However, the consequences will still be significant, with Saudi Arabia likely facing a GDP loss of around 3% and the UAE approximately 5%. This would represent the largest setback to their economic growth since the COVID-19 pandemic.
Additionally, the UN has assessed the impact of the conflict on Iran, predicting a GDP contraction of 10.4% and placing over 3.5 million people at risk of falling into poverty.
In light of the conflict with Iran, discussions in the United States have emerged regarding a substantial increase in defense spending. The Washington Post previously reported that the Pentagon has requested over $200 billion from the White House for congressional approval to fund military operations against Iran.
The UNDP's report outlines the potential economic toll of the US-Israel conflict with Iran on Arab nations, estimating losses between $120 billion and $194 billion. The analysis highlights significant job losses and rising poverty levels, particularly affecting Gulf and Levant countries.