Middle East conflict may push 32.5 million into poverty: UNDP
The UNDP warns that many developing countries lack the fiscal capacity to respond effectively, unlike advanced economies that can absorb shocks through subsidies and monetary policy
14 April, 2026
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The ongoing military escalation in the Middle East could push up to 32.5 million people into poverty worldwide, as energy and food price shocks ripple across economies, according to a new report by the United Nations Development Programme (UNDP).
In its policy brief titled Military Escalation in the Middle East: Reversals in Global Development, Policy Response Options, released April 13, the UNDP warns that the crisis is no longer confined to the region, with its economic fallout triggering what it describes as “broad-based reversals” in global development.
The report highlights a “triple shock” — rising energy costs, food price inflation, and declining GDP growth — as the primary drivers behind the projected surge in poverty.
Energy and food inflation emerge as key risk drivers
While GDP contraction contributes to economic stress, the UNDP analysis finds that inflation — particularly in food and energy — is the dominant factor worsening poverty outcomes.
Under its most severe scenario, global extreme poverty could rise by over 18 million people, while poverty at the upper-middle-income threshold increases by 32.5 million.
The impact is especially pronounced in lower-income economies, where households spend a larger share of income on basic necessities. As prices rise, purchasing power declines sharply, amplifying welfare losses.
Net energy importers face disproportionate exposure
The report identifies 37 net energy-importing countries — spanning the Gulf, Africa, Asia and Small Island Developing States — as particularly vulnerable due to their dependence on imported fuel and limited fiscal buffers.
In these economies, the combination of high import dependence and low income levels creates structural fragility, making them more exposed to external price shocks.
Notably, the analysis shows that inflation-driven impacts on poverty are significantly larger than those caused by growth slowdown alone, underscoring the outsized role of commodity price volatility.
The escalation has already disrupted oil and gas production, trade flows, and supply chains, pushing global energy prices higher and cascading into fertilizer and food markets.
These pressures are feeding into broader industrial and technology supply chains, creating downstream effects across sectors.
Regionally, the Arab states could see GDP decline between 3.7 per cent and 6 per cent, equivalent to losses of up to $194bn, with nearly 4 million additional people at risk of falling into poverty.
Fiscal strain intensifies for developing economies
The UNDP warns that many developing countries lack the fiscal capacity to respond effectively, unlike advanced economies that can absorb shocks through subsidies and monetary policy.
Globally, offsetting the income losses caused by the crisis would require an estimated $6bn in targeted cash transfers to protect those falling below the upper-middle-income poverty line.
At the same time, governments are facing difficult trade-offs between maintaining subsidies, managing debt, and protecting long-term development spending.
The report calls for targeted and temporary cash transfers as the most effective policy response, particularly for fiscally constrained countries.
It cautions against blanket energy subsidies, noting they are often regressive and fiscally unsustainable, disproportionately benefiting higher-income households.
Alternative measures include limited subsidies or vouchers for essential energy consumption, especially in countries lacking robust social protection systems.
Call for coordinated global action
The UNDP stresses that national responses alone will not be sufficient, calling for coordinated multilateral action to address energy supply constraints, inflation risks, and liquidity challenges in developing economies.
“The cost of inaction is significant,” the report notes, warning that without timely intervention, temporary shocks could translate into long-term development setbacks.
