UN warns 8 million in Asia-Pacific risk poverty if Iran war drags on

The United Nations has issued a grim warning about the costs to the Asia-Pacific region of a prolonged conflict in Iran, forecasting job losses, crippling inflation and food insecurity, with the poorest nations brutally exposed to the oil shock and millions of informal workers facing the body blow of rising transport costs. More than 8 million people across the Asia-Pacific could be plunged into poverty if the crisis that closed the Strait of Hormuz drags on, according to a study published on Tuesday by the UN Development Programme (UNDP). The report also warned that the conflict could drain up to US$299 billion from the region’s gross domestic product, with government budgets stretched to subsidise rising costs. Fertiliser shortages are a particular concern for agrarian economies as Middle Eastern urea fails to pass the Strait of Hormuz, threatening Asian grain supplies and creating a domino effect on food costs. The report came as the leaders of the International Monetary Fund, World Bank and International Energy Agency met in Washington on Monday to take stock of the damage to economies and energy markets caused by the Iran war. The US-Israeli coalition that attacked Iran in late February has agreed to a temporary ceasefire with Tehran. But it is unclear if a peace deal will be reached, or whether the mobilisation of American warships in a counterblockade of the strait – aimed at strangling Iran’s crucial oil revenues – will end or escalate the conflict. The price Brent crude – a global benchmark measure – has hovered above US$100 a barrel for weeks, with the demand pushing prices even higher for Asian buyers at the end of the supply chain. “The strain this war is placing across the Asia-Pacific is already visible,” said Kanni Wignaraja, UN assistant secretary general and UNDP regional director for Asia and the Pacific. “It is reaching households faster than policy can adjust. Despite the recent ceasefire, the resulting prolonged volatility in global markets is imposing increasingly difficult trade-offs between stabilising prices, supporting vulnerable households, and maintaining essential public services and market investments.” Before the war, Iranians already faced some of the highest inflation rates in the world. Now, on top of the bombings, prices of essential foods have spiked and millions risk being shunted into poverty by the destruction of the country’s economy. The risks were “particularly acute in countries that depend heavily on imported food, fuel, fertiliser, and other agricultural inputs”, the report warned, citing Bangladesh, India, Pakistan and Sri Lanka as among the most exposed nations. The timing of the fertiliser crunch could hardly be worse, with hundreds of millions of people in India depending on the success of the monsoon cropping season, which begins in June. Experts have warned that fertiliser restrictions across the Asia-Pacific may have lasting effects, with the costs of weak harvests ricocheting over several months. Food price inflation is set to soar. Pakistan faces a rise of 5 per cent if the conflict drags on, according to the UNDP, as transport and supply chain costs rise in lockstep with oil prices. “In Myanmar, food inflation, already at around 25 per cent, could rise to 35 per cent, with particularly severe effects on nutrition beyond staple crops,” the report added. Import-dependent Pacific nations including Samoa and Papua New Guinea also face sharp price rises on basic goods they must source from overseas. The oil and fertiliser crunch may be compounded by a sharp drop in remittances from the Gulf, which employs tens of millions of mainly South Asian workers in its construction, hospitality and industrial sectors. India, Pakistan, Bangladesh, Nepal and the Philippines are particularly exposed to remittance losses “as reduced Gulf economic activity weakens household incomes and purchasing power”, the report warned. The Iran war has inflicted economic pain on everyone from Thai fishers to Philippine jeepney drivers struggling to fill their fuel tanks, as surging oil prices tighten the global supply chain. The UNDP urged import-reliant economies across the Asia-Pacific to turn crisis into opportunity by becoming more energy self-sufficient and building more resilient trading relationships. “This is not about regular economic management measures, but a broader test of whether countries can look ahead and adapt fast to protect human development and human security gains in a far more volatile insecure world,” Wignaraja added.

UN warns 8 million in Asia-Pacific risk poverty if Iran war drags on

.css-1c6uqr6{color:inherit;font-weight:inherit;font-size:inherit;font-family:inherit;line-height:inherit;overflow-wrap:break-word;}A new UNDP report has forecast job losses, crippling inflation and food insecurity, with the poorest nations brutally exposed to the oil shock

A new UNDP report has forecast job losses, crippling inflation and food insecurity, with the poorest nations brutally exposed to the oil shock