Iran war may cost Arab countries up to $200 billion, says UN
Arab countries could suffer staggering losses of up to $200 billion due to the Iran conflict, according to a new United Nations study.
The US-Israel war against Iran could cost Arab states between $120 billion to $194 billion in economic losses, new estimates by the United Nations Development Programme (UNDP) suggest.
Military escalation could wipe out between 3.7%-6% of the region’s collective gross domestic product (GDP). Coupled with an estimated loss of 3.6 million jobs - exceeding the ones created in the region last year - the reversal will cast up to 4 million people into poverty.
The body said that it conducted five simulation scenarios, representing escalating levels of conflicts. The GCC countries and Levant subregions are expected to bear the brunt of the largest macroeconomic losses, with potential economic contractions of up to 8.5% and 8.7%, respectively.
The crisis is expected to exacerbate poverty in the Levant region by 5%, edging an additional 2.85-3.30 million people into poverty - accounting for over 75 percent of the rise in poverty across the region.
“This crisis rings alarm bells for countries of the region to fundamentally reevaluate their strategic choices of fiscal, sectoral, and social policies,” said Abdallah Al Dardari, UN assistant secretary general and regional bureau director for Arab States at UNDP.
“Our findings underline the pressing need to strengthen regional collaboration to diversify economies - beyond reliance on growth driven by hydrocarbons, and to expand production bases, secure trade and logistics systems.”
Qatar and Kuwait could witness a 14% contraction in their national outputs this year should the conflict continue through to the end of April, Bloomberg reported Goldman Sachs Group economist Farouk Soussa, as saying.
It is a stark downside from International Monetary Fund’s growth estimates for both countries in the run-up to the conflict. The agency projected Qatar’s GDP to grow by 6.1% in 2026 and Kuwait’s economy to expand by 3.8% this year.
The conflict, now in its fifth week, has caused considerable damage to Iranian civilian and military architecture caused by the joint US-Israeli onslaught. The attacks also wiped out its top Iranian security and political echelons.
Iran has carried out retaliatory attacks on its Gulf neighbours, causing substantial damage to airports, hotels, technology, and energy infrastructure as well as military bases.
The repercussions are visible in global energy markets, with the crisis helping push Brent crude prices from roughly $72 per barrel to nearly $120 before easing slightly.
The regional aviation industry has also felt the heat, with depressed travel demand and a lingering unease among travellers.
“Since the escalation at end February 2026, the regional aviation network has shifted from an integrated commercial system to a set of restricted corridors, with several countries implementing partial or full airspace closures. As a result, global air cargo capacity on routes linking Asia, the Middle East, and Europe declined by nearly 40% between February 28 and March 3,” the study added.
