UNDP analysis reveals a ‘triple shock’ of surging energy costs, food price spikes and stalled growth that risks erasing years of development progress across 162 countries.

The United Nations Development Programme (UNDP) has issued a stark warning that the ongoing war in Iran could push an additional 32 million people worldwide into poverty, with the heaviest burden falling on developing nations already struggling with limited fiscal resources.

In its policy brief released on Monday, the UNDP described the conflict as “development in reverse”, cautioning that even a fragile ceasefire may not prevent long-lasting economic damage. The report sets out three scenarios based on the duration and intensity of disruptions to global energy markets. In the worst-case projection – six weeks of major disruption to oil and gas production followed by eight months of persistently higher costs – as many as 32.5 million people globally could fall below the upper-middle-income poverty line of $8.30 per person per day, as defined by the World Bank.

Triple Shock Hits Global South Hardest

The UNDP identifies a “triple shock” confronting the world economy: soaring energy prices, rising food costs and weaker overall growth. Energy prices have surged since the first US-Israeli airstrikes on Tehran in late February, exacerbated by Iran’s closure of the Strait of Hormuz, a critical chokepoint for roughly one-fifth of global oil supplies. The ripple effects have extended to fertiliser production and international shipping, creating what experts term a “food security timebomb” for poorer countries.

UNDP Administrator and UN Under-Secretary-General Alexander De Croo, the former prime minister of Belgium, said the human cost is particularly heartbreaking. “A conflict like this is development in reverse. Even if the war stops, and a ceasefire is obviously very, very welcome… You will see an enduring impact, especially in the poorer countries, where you push people back into poverty,” he stated. “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 analysis, which employs Global Trade Analysis Project (GTAP) modelling, shows the shock is not confined to the Middle East. It reaches 162 countries, with half the projected global increase in poverty concentrated in 37 net energy-importing nations spanning the Gulf region, sub-Saharan Africa, Asia and small island developing states. These countries have the least fiscal space to absorb higher import bills or cushion their populations through subsidies or social safety nets.

Regional Fallout Compounds Global Crisis

While the global figure of 32 million dominates the headline warning, a companion UNDP assessment focused on Arab states paints an equally grim picture closer to the conflict zone. One month of escalation has already wiped out more than a year of regional economic growth, with GDP losses estimated between $120 billion and $194 billion – equivalent to 3.7 to 6 per cent of collective output. Unemployment could rise by up to four percentage points, costing 3.6 million jobs, while an additional four million people in the region alone could slip into poverty.

The timing could not be worse. Many advanced economies, including the United States, Germany, France and the United Kingdom, have slashed development aid by $174.3 billion in 2025 – nearly a quarter less than the previous year – as they grapple with high debt, elevated borrowing costs and competing demands for defence spending. The International Monetary Fund has warned of permanent “scarring effects” on the global economy, even if fighting subsides.

Urgent Policy Responses Needed

The UNDP urges immediate, targeted interventions to protect the most vulnerable. Its primary recommendation is temporary and precisely directed cash transfers to households at risk of falling into poverty. Depending on the scenario, roughly $6 billion in such support could neutralise the immediate shock for those most affected. Secondary options include time-limited vouchers or subsidies for essential blocks of electricity and cooking gas. The agency explicitly cautions against broad-based energy subsidies, which tend to benefit wealthier households disproportionately and strain public finances over the longer term.

De Croo emphasised the economic logic of acting quickly. “There is a positive economic payout for giving short-term cash transfers to avoid people getting back into poverty,” he said. He also framed development investment in strategic terms: “Investments in poverty reduction, in strong institutions, in mitigating and adapting to climate change… these are elements that will help you to stabilise the world.”

Long-Term Risks and the Path Ahead

As world leaders convene for the IMF’s spring meetings in Washington, the UNDP is calling for a coordinated global response. Without swift action, the report warns, hard-won gains in health, education and living standards could be erased in weeks — undoing progress that took years to achieve. The agency stresses that the crisis forces impossible trade-offs in vulnerable economies between stabilising prices today and funding essential services tomorrow.

The conflict, now in its sixth week with doubts lingering over the durability of any ceasefire, has already moved from an acute phase to an enduring one. The longer the economic dislocations persist, the greater the risk that millions more will be trapped in poverty.

The UNDP’s message is clear: while the war may be geographically distant for many, its economic consequences are global. Protecting the poorest from its fallout is not only a moral imperative but a practical necessity to prevent wider instability. International financial institutions, development banks and donor governments have been urged to step up support before the window for effective intervention narrows further.

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