Escalating military tensions in the Middle East could cost Asia-Pacific economies up to $299 billion in 2026 and push 8.8 million people into poverty, according to a United Nations Development Program (UNDP) report released this week. The findings underscore the region’s vulnerability to global shocks, with low-income households, migrant workers, and small businesses facing the steepest risks.
Energy, Trade, and Labor Markets at Risk
Rising fuel and freight costs are driving immediate strain across Asia-Pacific, where over 80% of crude oil and liquefied natural gas from the Strait of Hormuz fuels key industries. Higher prices for transport, electricity, and food are disproportionately affecting women and informal workers, while governments grapple with stabilizing markets and protecting social services.
Regional Disparities in Impact
South Asia faces the most severe setbacks due to limited fiscal buffers and heavy reliance on imported energy, while East and Southeast Asia may see smaller disruptions. Iran could lose 1–1.5 years of progress on its Human Development Index, with other economies risking weeks to months of development losses if instability persists.
A Call for Adaptive Policies
UNDP Regional Director Kanni Wignaraja emphasized the need for forward-looking strategies: “This is a test of whether countries can adapt fast enough to protect human security in a volatile world.” The report urges policymakers to balance price stabilization, social protection, and long-term investments amid mounting uncertainty.
