UNDP Report on West Asia conflict

Syllabus: GS2/IR; GS3/Economy

In News

• Recently, the United Nations Development Programme (UNDP) released a report titled ‘Military Escalation In The Middle East: Human Development Impacts Across Asia And The Pacific’.

Key findings 

• Global Levels: Military escalation in West Asia/Middle East is worsening human development pressures across Asia-Pacific.
  • Higher fuel, freight, and input costs are reducing purchasing power, increasing food insecurity, straining budgets, and weakening livelihoods.
  • Across Asia-Pacific, the economic impact could reach up to $299 billion.
  • Globally, up to 8.8 million people could be pushed into poverty under severe scenarios.
• Poverty: India’s poverty increase ranges from about 4 lakh to 2.5 million people, depending on the scenario.
  • In the most severe estimate, about 24.6 lakh people may be pushed into poverty.
  • Poverty rate may rise slightly from 23.9% to 24.2%.
  • Total people in poverty could rise from about 35.15 crore to 35.40 crore.
• Human Development Index (HDI) impact: India may lose around 0.03 to 0.12 years of human development progress, while neighbouring countries like Nepal and Vietnam may also see smaller losses of about 0.02 to 0.09 and 0.02 to 0.07 years respectively.
  •  Iran, however, could face a much sharper decline equivalent to about 1 to 1.5 years of HDI progress, whereas China’s impact is relatively limited.
• Energy and trade dependence: India depends heavily on imports for its energy and fertilizer needs, with over 90% of its oil requirements coming from abroad, mainly West Asia.
  • The region supplies more than 40% of India’s crude oil imports, around 90% of LPG imports, and over 45% of fertilizer imports, while domestic urea production is also significantly reliant on imported LNG.
• Economic effects:  West Asia is an important trade partner for India, accounting for about 14% of its exports and 20.9% of imports. India’s non-oil exports to the region, worth around $48 billion, include products like basmati rice, tea, gems and jewellery, and apparel, while countries such as Bangladesh and India also face disruptions in shipments and logistics.
  • Rising LNG prices are pushing some countries (including India) toward higher coal usage.
  • Trade disruptions affect 25 of 36 countries in the region, due to freight surcharges, insurance costs, and supply chain delays.
• Food security & agriculture: Food insecurity may worsen due to rising costs and reduced remittances from Gulf countries.
  • India may face timing risks during the Kharif (monsoon) cropping season.
  • Urea stocks (6.11 million tonnes) provide only a short-term buffer.
• Remittances & labour impact: Around 9.37 million Indians live in GCC countries, and remittances from the Gulf make up about 38–40% of India’s total inward remittances.
  • A slowdown in Gulf economic activity could therefore reduce these inflows and negatively affect household incomes across South Asia.
• Employment and MSMEs: About 90% of India’s workforce is informal, making it highly vulnerable to economic shocks.
  • MSME sectors such as hospitality, construction, gems, and manufacturing may face higher costs, supply shortages, job losses, and reduced working hours, with migrant and informal workers being the most affected.
  • Additionally, sectoral pressures include rising raw material costs for medical devices by around 50% and a 10–15% increase in medicine wholesale prices.

Suggestions 

• Despite the negative impacts of the conflict, countries also have an opportunity to strengthen long-term resilience by improving social protection systems
• Countries need to build stronger local and regional supply chains.
• And they need to diversify energy and food systems to reduce future vulnerability.

Source :TH