Gaza Crisis Threatens Regional Stability: UNDP Warns of Looming Socio-Economic Collapse in Neighboring Countries

Amman - The humanitarian crisis unfolding in Gaza has reached a critical point, with the United Nations Development Programme (UNDP) and the Economic and Social Commission for Western Asia (ESCWA) warning that the region is on the brink of a major collapse. This perilous situation puts 2.2 million people at immediate risk, and the ongoing war's ripple effects could have long-lasting socio-economic consequences for neighboring countries in the Arab States region.

 

Preliminary findings from a rapid assessment conducted by UNDP and ESCWA reveal that human development in Egypt, Lebanon, and Jordan is at risk of setback. If the conflict persists for a third month, an estimated 230,000 more people in Egypt, Jordan, and Lebanon may fall into poverty by the end of 2023. The aggregated lost Gross Domestic Product (GDP) for these three countries could reach up to US$10.3 billion or 2.3 percent.

 

The newly released rapid assessment, titled 'Expected Socio-Economic Impacts of the Gaza Crisis on Neighboring Countries in the Arab States Region,' examines potential regional spillover effects based on lessons learned from previous conflicts in the region. These effects encompass changes in oil prices, an influx of refugees, pressures on public debt and fiscal space, and impacts on tourism and trade. Although the full impact of these spillover effects may not have materialized yet, the assessment underscores the importance of closely monitoring these risk variables.

 

Abdallah Al Dardari, Director of the Regional Bureau for Arab States, UNDP, stressed the need for an immediate humanitarian ceasefire in Gaza, describing the war as catastrophic for the Palestinian people. He emphasized that if the conflict persists, its repercussions could extend to neighboring countries already grappling with economic challenges from COVID-19 and other global crises, including those triggered by the war in Ukraine.

 

The assessment estimates that if the conflict surpasses three months, the socio-economic impacts on neighboring countries will worsen. Upper-bound estimates suggest that close to half a million people could fall into poverty, with an aggregate total GDP loss of US$18 billion or 4 percent for the three countries in 2024.

 

Using economic modeling tools, the authors simulated the impacts of the war on neighboring countries, focusing primarily on Egypt, Jordan, and Lebanon, and including Syria where data is available. The assessment considered two scenarios—a three-month and six-month duration of the war, both at the current intensity and geographical scope limited to Gaza and the occupied Palestinian territory.

 

The authors cautioned that if the war expands geographically, the escalation of impacts could become more pronounced. Urgent measures to build social and economic resilience in impacted neighboring countries are recommended, with a strong emphasis on prioritizing measures to end the war and alleviate the devastating impact on Gaza and the occupied Palestinian territory.