The escalating Iran war is pushing more than 30 million people back into poverty, warns Alexander De Croo, highlighting how a regional conflict is rapidly turning into a global economic and humanitarian crisis.

A Crisis with Global Consequences

What began as a geopolitical confrontation in the Gulf is now unfolding into a far-reaching development emergency. According to the United Nations Development Programme (UNDP), the disruption caused by the Iran war is reversing years of progress in poverty reduction. Speaking in Bangkok, De Croo emphasized that the timing could not be worse, as the crisis coincides with crucial agricultural cycles in many developing nations.

At the center of this disruption lies the Strait of Hormuz, a vital maritime corridor for energy and commodity flows. Its blockage has triggered ripple effects that extend far beyond the Middle East, affecting food security and economic stability worldwide.

The “Triple Shock” Driving Poverty

The UNDP identifies a “triple shock” mechanism through which the conflict is amplifying poverty.

·       First, energy prices have surged due to restricted oil and gas exports.

·       Second, fertilizer production and supply have been hit, as these depend heavily on natural gas and uninterrupted shipping routes.

·       Third, global economic growth is slowing, further reducing incomes and job opportunities.

These interconnected shocks create a feedback loop: higher energy costs increase transportation and production expenses, which in turn raise food prices. For developing economies already operating on thin margins, this combination is particularly damaging.

Fertiliser Disruptions and Food Insecurity

Fertiliser supply has emerged as a critical vulnerability. A significant share of the world’s traded urea and other key fertilisers passes through the Gulf. When shipments are delayed or production slows, farmers face both higher prices and limited availability.

The consequences are immediate and long-term. Reduced fertiliser use leads to lower crop yields, which will become evident in upcoming harvests. Organizations such as the World Bank, International Monetary Fund, and World Food Programme have all warned that rising input costs combined with declining output will push food prices upward.

For poorer households, which already spend a large portion of their income on food, even small price increases can have devastating effects.

Long-Term Economic Fallout

The economic damage is unlikely to end with a ceasefire. Disrupted supply chains, reduced trade flows, and declining remittances will continue to strain economies long after hostilities subside. UNDP projections suggest that global GDP could decline by up to 0.8 percentage points due to the conflict.

Developing and lower-middle-income countries will bear the brunt of this slowdown. Limited fiscal capacity means these nations have fewer tools to cushion the impact, increasing the risk of prolonged economic hardship and social instability.

A Regional War, A Global Setback

The Iran conflict illustrates how deeply interconnected the modern world has become. What happens in a strategic chokepoint can quickly cascade into a global crisis affecting food, energy, and livelihoods. The warning that over 30 million people may fall back into poverty is not just a statistic—it is a stark reminder of the fragility of development gains. Addressing this crisis will require coordinated international action, not only to stabilize markets but also to protect the most vulnerable from the enduring consequences of war.

(With agency inputs)