Abdullah Al-Dardari, Assistant Secretary-General of the United Nations and Director of the Regional Office for Arab States, has warned that the military escalation in the Middle East is placing the regional economy in front of an unprecedented economic shock. According to a special report issued by the United Nations Development Programme, economic losses resulting from the conflict could reach 194 billion dollars, threatening to push approximately 4 million people into the poverty line.
Al-Dardari pointed out that the economic impact of military escalation goes beyond the immediate conflict, as disruptions are expected to lead to a significant deterioration in energy markets and growth, reflecting negative repercussions on poverty in the region.
Details of the Event
In an interview with the newspaper "Asharq Al-Awsat," Al-Dardari confirmed that the figures currently circulating rely on simulation models based on previous crises, such as the crises in Gaza and Lebanon, where their accuracy in measuring economic repercussions has been proven. He explained that the expected scenarios indicate a decline in trade, disruption of oil derivatives trade, and deterioration of the investment environment, which increases pressures on the public finances of the countries.
He also noted that the closure of the Strait of Hormuz has significantly affected oil exports, complicating the economic situation further. He pointed out that potential losses could range between 120 billion dollars and 194 billion dollars, which equates to a percentage ranging between 3.7% and 6.0% of the region's total GDP.
Context and Background
These warnings come at a sensitive time, as the regional economy faces significant challenges due to ongoing military escalation. Data has shown that disruptions in vital maritime corridors, such as the Strait of Hormuz, could lead to record spikes in oil prices, negatively impacting economies reliant on energy imports.
Historically, the region has witnessed many economic crises resulting from conflicts, but the current situation appears more complex, as these crises are expected to lead to significant job losses and increased unemployment rates.
Consequences and Impact
Estimates suggest that military escalation could result in the loss of around 3.6 million jobs, reflecting the magnitude of the negative impact on the labor market. It is also expected that the level of human development in the region will decline by between 0.2% and 0.4%, which equates to a setback of nearly half a year of progress made in human development.
Al-Dardari warned that the continuation of the conflict could put monetary stability in the region at risk, which may force central banks to take difficult measures, such as raising interest rates, thereby increasing the burden of servicing sovereign debts.
Impact on the Arab Region
The economic repercussions vary significantly across the region, with the largest losses concentrated in the Gulf Cooperation Council countries and the Mashreq region. In the Mashreq region, it is expected that between 2.85 and 3.30 million additional people will be pushed into poverty, representing over 75% of the total increase in poverty across the Arab region.
In Lebanon, the report warns of a "silent collapse" affecting refugees and displaced persons, with the interruption of relief chains, increasing pressures on vital sectors such as education and health. Under these circumstances, it becomes essential to reassess the strategic options of the concerned countries and enhance regional cooperation to diversify economies.
In conclusion, Al-Dardari emphasizes the importance of developing new developmental models based on economic diversification and strengthening economic partnerships, which helps mitigate exposure to shocks and conflicts.