A war between the United States, Israel, and Iran could erase nearly $200 billion in economic growth across the Middle East, according to a new analysis by the United Nations Development Programme (UNDP) that highlights the severe risk to global energy supplies and regional stability.
"This crisis has already served as a wake-up call for the countries of the region," Abdallah Al Dardari, UN Assistant Secretary-General and Director of the UNDP's Regional Bureau for Arab States, said in a statement accompanying the report.
The conflict, which began on February 28, could trigger a deep and widespread socioeconomic crisis even if it ends quickly. The UNDP report projects that total GDP losses for Arab nations would range from $120 billion to $194 billion. The economic fallout could increase unemployment by up to four percentage points, eliminating 3.6 million jobs and pushing as many as four million people into poverty. The turmoil has already sent global energy prices soaring and caused bond risk for Gulf nations to spike to a five-year high, according to Fitch Ratings.
The most severe economic damage is concentrated in the Gulf Cooperation Council (GCC) countries, whose economies are reeling from the "de facto closure" of the Strait of Hormuz, a critical chokepoint for their oil and gas exports. Goldman Sachs Group estimates that if the conflict continues through the end of April, the economies of Qatar and Kuwait could each contract by 14 percent this year. This would represent the most severe recession for both nations since the Gulf War was triggered by Iraq's invasion of Kuwait in the early 1990s. Saudi Arabia and the United Arab Emirates are expected to fare slightly better by redirecting some oil shipments, but still face GDP declines of approximately three percent and five percent, respectively.
This article is for informational purposes only and does not constitute investment advice.
