More than 32 million people worldwide could be plunged into poverty by the economic fallout from the Iran war, with developing countries expected to be hit hardest, the United Nations Development Program (UNDP) warned.
In a report issued amid doubts over a fragile ceasefire, the UNDP said the world is facing a “triple shock” involving energy, food and weaker economic growth.
The agency said the conflict is reversing gains in international development, with the impact expected to be felt unevenly across regions.
Alexander De Croo, UNDP administrator and former prime minister of Belgium, said: “A conflict like this is development in reverse. Even if the war stops, and a ceasefire is very welcome, the impact is already there.”
“You will see an enduring impact, especially in poorer countries, where people are being pushed back into poverty. This is the most painful aspect. The people being pushed into poverty are very often the same people who were in poverty, escaped it, and are now being pushed back.”
Energy prices surged sharply during the six weeks of the Iran war after Iran’s closure of the Strait of Hormuz choked global oil and gas supplies. With knock-on effects on fertilizer supplies and global shipping, experts warn of a “time bomb” threatening food security in the developing world.
The head of the International Monetary Fund said the war’s “devastating effects” have caused lasting damage to the global economy, even if the conflict ends.
Publishing its report alongside meetings of world leaders in Washington for the IMF Spring Meetings, the UNDP said a global response is required to support countries hardest hit by the economic fallout.
It said targeted and temporary cash transfers are needed to protect the most vulnerable households in developing countries, at a cost of about $6 billion to mitigate the shocks for those living below the poverty line.
De Croo said international agencies and development banks could provide financial support. “There is a positive economic return from short-term cash transfers to avoid people being pushed back into poverty,” he said. Alternative measures could include temporary subsidies or vouchers for electricity or cooking gas.
Setting out three scenarios for the war, the UNDP found that in the worst case – involving six weeks of major disruption to oil and gas production and eight months of sustained higher costs – up to 32.5 million people globally would fall into poverty.
The report used the upper-middle-income poverty line defined by the World Bank, set at less than $8.30 per person per day.
The UNDP said that while richer countries are in a stronger position to cushion the economic fallout, countries in the global south face weaker conditions and already severe financial constraints.
This comes as western governments, including the US, Germany, France and the UK, cut aid spending amid rising borrowing and debt levels in advanced economies and calls to increase defense spending.
Data from the Organization for Economic Co-operation and Development published last week showed that countries in its Development Assistance Committee cut aid spending to $174.3 billion in 2025, nearly a quarter lower than in 2024.
