The ongoing military escalation in the Middle East, now in its fifth week, could reduce the region’s combined GDP by 3.7 to 6 percent, amounting to losses of up to $194 billion, according to a new report by the United Nations Development Programme (UNDP).

The document warns that these losses may exceed the region’s total GDP growth recorded in 2025, The Caspian Post reports, citing Xinhua.

It also projects unemployment could rise by up to 4 percentage points, resulting in 3.6 million job losses-surpassing the number of jobs created last year-and pushing as many as 4 million people into poverty.

Titled “Military Escalation in the Middle East: Economic and Social Implications for the Arab States Region,” the report highlights deep structural vulnerabilities that allow even short-term conflicts to trigger widespread and lasting socioeconomic damage.

It notes that the impact varies significantly across subregions due to differing economic structures. Overall, the Human Development Index is expected to decline by 0.2 to 0.4 percent, setting back progress by roughly six months to one year.

Abdallah Al Dardari, UN assistant secretary-general, said the crisis should prompt countries to reassess fiscal, sectoral and social policies, calling it a turning point for the region’s development path.

He also stressed the need for stronger regional cooperation to diversify economies beyond hydrocarbons, expand production, secure trade and logistics systems, and reduce vulnerability to future shocks.

The assessment is based on Computable General Equilibrium modeling, analyzing a four-week conflict scenario through factors such as higher trade costs, productivity losses and localized capital destruction. It includes five scenarios ranging from moderate disruption to extreme cases involving severe trade shocks and a halt in hydrocarbon production.