Iran War Could Push 32 Million Into Poverty Worldwide, UNDP Warns

The economic impact of the Iran war could push more than 32 million people into poverty worldwide, with developing countries expected to be affected the most, according to the United Nations Development Programme (UNDP). Released amid uncertainty over a fragile ceasefire, the report said the world economy is facing a "triple shock" from rising energy prices, food insecurity and slower economic growth. It warned that the conflict is reversing development gains, with uneven impacts across regions. Energy prices have surged in the weeks since US-Israeli airstrikes on Tehran, worsened by Iran's closure of the Strait of Hormuz, which has disrupted global oil and gas supplies. The effects have also spread to fertiliser supplies and shipping, raising concerns about a growing food crisis in developing countries. The UNDP outlined three scenarios for the war's economic impact. In the worst case — involving weeks of major disruption to oil and gas production followed by months of higher costs — as many as 32.5 million people could fall into poverty. The estimate is based on the World Bank's upper-middle-income poverty line of $8.30 per person per day. About half of the increase in poverty would be concentrated in 37 energy-importing countries across the Gulf, Africa, Asia and small island developing states. Alexander De Croo, administrator of the UNDP and former prime minister of Belgium, said, "A conflict like this is development in reverse. Even if the war stops, and a ceasefire is obviously very very welcome. But the impact is already there," as quoted by The Guardian. "You will see an enduring impact, especially in the poorer countries, where you push people back into poverty. That's the most heartbreaking element. The people being pushed into poverty are very often the people who used to be in poverty, got out of it, and are now being pushed back." The head of the International Monetary Fund has warned that the conflict's "scarring effects" have already caused lasting damage to the global economy, even if peace is maintained. The UNDP called for a global response to support the hardest-hit countries. It recommended targeted and temporary cash transfers to protect vulnerable households, estimating that about $6bn would be needed to offset the impact for those falling below the poverty line. De Croo said international agencies and development banks could support such measures. "There is a positive economic payout for giving short-term cash transfers to avoid people getting back into poverty," he said. He added that temporary subsidies or vouchers for electricity or cooking gas could also help, though the report warned against blanket subsidies as they would benefit wealthier households and be difficult to sustain. While richer countries are better placed to manage the impact, the UNDP said developing nations face greater challenges due to limited financial resources and existing economic pressures. It also noted cuts in aid spending by western governments, including the US, Germany, France and the UK, as they deal with rising debt and increased defence spending.