Us-israel clash with iran could wipe $200 bn off arab economies, un warns

The first salvo fired on 28 February is already costing the Arab world between $120 billion and $194 billion in lost GDP, according to a blunt UN analysis released Tuesday. The UN Development Programme’s Arab States office modelled four scenarios; even the shortest, sharpest escalation leaves the region 5% poorer and 3.6 million workers jobless.

The strait of hormuz choke-point doubles the pain

Every simulation assumes the waterway stays contested. Close it outright and food-import bills across the Levant and GCC jump 18%; fertiliser prices track oil futures, so the poorest importers—Egypt, Sudan, Yemen—get stung twice. The UNDP calculates an extra four million people pushed below the poverty line, most of them under 30 and already unemployed.

Abdallah Al Dardari, the programme’s deputy head, calls the figures ‘a conservative floor’. His team stopped short of war-gaming a regional blackout of under-sea cables or a cyber hit on Saudi Aramco; the spreadsheet breaks past $300 billion once those variables are toggled.

Investors are voting with their feet. Gulf sovereign-debt spreads have widened 60 basis points since February, wiping out the post-COP28 green-funding bump. Dubai’s property brokers still talk up villas on the Palm, but escrow-account inflows are down 30%; the smart money is parking cash in short-term US T-bills rather than betting on a post-war reconstruction boom.

The report lands 48 hours before the IMF-World Bank spring meetings, where Middle Eastern finance ministers had hoped to pitch AI cities and desalination IPOs. Instead they will arrive with revised deficits and a begging bowl for grain subsidies. The UN reminds them that every $10 on a Brent barrel feeds straight into a 0.4% fiscal-gap widening; at today’s risk premium that math is already baked in.

Bottom line: the guns echo for two months, the ledger bleeds for a decade. The region that once promised to sell the world sunshine now risks importing inflation and exporting refugees. The next chapter is not written in Washington or Tehran but in the bond spreads trading while you read this.