UNDP Warns Iran War Could Plunge 32 Million into Poverty, Reversing Development Gains
More than 32 million people worldwide could be plunged into poverty due to the economic fallout from the Iran war, according to a stark report from the United Nations Development Programme (UNDP). The agency warns that developing countries are expected to bear the brunt of this crisis, with the conflict triggering what it describes as a "development in reverse" scenario.
A 'Triple Shock' of Economic Pressures
The UNDP report, issued amid uncertainties over a fragile ceasefire, highlights that the world is confronting a "triple shock" involving surging energy prices, rising food costs, and weaker economic growth. This combination is reversing hard-won gains in international development, with impacts predicted to be felt unevenly across different regions.
Alexander De Croo, administrator of the UNDP and former prime minister of Belgium, emphasised the devastating human cost. "A conflict like this is development in reverse. Even if the war stops, and a ceasefire is obviously very very welcome. But the impact is already there," he stated. "You will see an enduring impact, especially in the poorer countries, where you push people back into poverty. That's the most heartbreaking element. 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."
Energy and Food Security Crisis
Energy prices have skyrocketed in the six weeks since the initial US-Israeli airstrikes on Tehran, exacerbated by Iran's closure of the Strait of Hormuz, which has severely restricted oil and gas supplies to the global economy. This disruption has created a knock-on effect, impacting fertiliser supplies and global shipping logistics. Experts are now warning that a "food security timebomb" has been activated for the developing world, threatening widespread hunger and instability.
Even if a durable peace can be achieved in the Middle East, the head of the International Monetary Fund has cautioned that the "scarring effects" from the conflict have already inflicted permanent damage on the global economy. The UNDP's report, published as world leaders convene in Washington for the IMF's spring meetings, calls for a coordinated global response to support the nations hardest hit by this economic turmoil.
Proposed Interventions and Financial Support
The UNDP advocates for targeted and temporary cash transfers to protect the most vulnerable households in developing countries. This measure, estimated to cost approximately $6 billion, aims to neutralise the shocks for those falling below the poverty line. De Croo suggested that international agencies and development banks could provide the necessary financial support, noting, "There is a positive economic payout for giving short-term cash transfers to avoid people getting back into poverty." Alternative interventions could include temporary subsidies or vouchers for essential utilities like electricity or cooking gas.
However, the agency strongly warns against implementing blanket subsidies, as these would inadvertently benefit wealthier households and prove financially unsustainable over the long term.
Scenarios and Global Impact
The report outlines three potential scenarios for the war's economic impact. In the worst-case scenario—involving six weeks of major disruption to oil and gas production followed by eight months of lingering higher costs—as many as 32.5 million people globally could fall into poverty. This assessment uses the World Bank's upper-middle-income poverty line, defined as income below $8.30 per person per day.
Half of the projected global poverty increase would be concentrated in 37 net energy-importing countries, spanning the Gulf region, Africa, Asia, and small island developing states. While wealthier nations are better positioned to cushion the economic fallout, countries in the global south face a weaker starting point, already grappling with severe financial constraints.
Aid Cuts and Long-Term Consequences
This alarming news emerges as Western governments, including the US, Germany, France, and the UK, are reducing their aid spending. This trend is driven by elevated borrowing and debt levels across advanced economies, coupled with increasing demands to boost defence budgets. Recent figures from the Organisation for Economic Co-operation and Development reveal that countries in its development assistance committee slashed aid spending by $174.3 billion in 2025, a reduction of nearly a quarter compared to 2024.
De Croo acknowledged the pressures facing affluent nations but stressed that aid cuts would have detrimental long-term effects. "Investments in development, to say it in military terms, they are the ultimate pre-emptive strike. Why you do a pre-emptive strike? You do it to avoid a conflict starting. That is what development does," he explained. "If you invest in poverty reduction, in strong institutions, in mitigating and adapting to climate change; these are elements that will help you to stabilise the world."
The UNDP's findings underscore the urgent need for international solidarity and strategic financial interventions to prevent a humanitarian catastrophe and safeguard decades of progress in global development.
