The military build-up in the Middle East, now in its fifth week, could cost the region’s economies 3.7% to 6.0% of their collective Gross Domestic Product (GDP), according to estimates by the United Nations Development Program (UNDP). This would represent a staggering loss of US$120 billion to US$194 billion, which exceeds the cumulative regional GDP growth achieved in 2025.
And it would also cause unemployment of up to 4 percentage points – the equivalent of 3.6 million jobs lost – a figure greater than the total number of jobs created in the region in 2025.
If projections are confirmed, these reversals will push up to 4 million people into poverty.
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The estimates are contained in the study “Military Escalation in the Middle East: Economic and Social Implications for the Arab States region”, published this week by the UNDP. The survey exposes the worrying reality of the region’s characteristic structural vulnerabilities, which allow a short-term military escalation to generate deep and broad socioeconomic impacts that can persist in the long term.
“This crisis sounds an alarm for countries in the region to fundamentally reassess their strategic fiscal, sectoral and social policy choices, representing an important turning point in the region’s development trajectory,” said Abdallah Al Dardari, UN Assistant Secretary-General and Director of the Regional Office for the Arab States at UNDP.
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“Our findings highlight the urgent need to strengthen regional collaboration to diversify economies — beyond dependence on hydrocarbon-driven growth, and to expand production bases, secure trade and logistics systems, and expand economic partnerships while reducing exposure to shocks and conflict.”
The study uses a model to capture the magnitude of disruptions caused by a four-week conflict and projects its effects through key transmission channels, including increased business costs, temporary productivity losses, and localized destruction of capital.
In the five designed simulation scenarios, increasing levels of conflict are represented, ranging from a “moderate disruption”, in which trade costs increase tenfold, to an “extreme disruption and energy shock”, where trade costs increase a hundredfold, intensified by the halt in hydrocarbon production.
The results highlight that the impacts are not uniform, varying significantly across the region due to the structural characteristics of its main sub-regions.
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Estimates suggest that the largest macroeconomic losses are concentrated in the Gulf Cooperation Council (Bahrain, Kuwait, Saudi Arabia, Qatar, Oman and the United Arab Emirates) and the Levant subregions (Syria, Lebanon, Palestine, Israel, Jordan), where heavy exposure to trade disruptions and volatility in energy markets drive significant declines in production, investment and trade. Both sub-regions could lose between 5.2% to 8.5% and 5.2% to 8.7% of their GDP, respectively.
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The increase in poverty rates is concentrated in the Levant and in the least developed Arab countries (Sudan and Yemen), where basic vulnerability is greatest and shocks translate most strongly into social assistance losses.
In North Africa (Algeria, Egypt, Libya, Morocco and Tunisia), impacts remain moderate, but still significant in absolute terms.
In the Levant, the crisis is expected to increase poverty by 5%, pushing somewhere between 2.85 million to 3.30 million people into poverty — representing more than 75% of the increase in poverty in the region.
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Across the region, human development, as measured by the Human Development Index (HDI), is expected to decline by approximately 0.2% to 0.4%, corresponding to a setback of approximately half a year to almost a year of progress in human development.
