ECONOMIC AND HUMAN DEVELOPMENTIMPACTS IN THE ISLAMIC REPUBLIC OF IRANMILITARY ESCALATION IN THE MIDDLE EAST: 31 MARCH 2026 Contents Executive Summary ............................................................................................................................................................ 31. Context and Baseline Conditions................................................................................................................................. 42. Social and Human Development Impacts ................................................................................................................ 62.1 Human Development Index Impacts ............................................................................................................................................ 62.2 Poverty Impacts ....................................................................................................................................................................................72.3 Employment and Livelihood Impacts .......................................................................................................................................... 92.4 Food Security Impacts...................................................................................................................................................................... 92.5 Health System and Public Health Impacts ...............................................................................................................................102.6 Education and Human Capital Impacts ...................................................................................................................................... 11Conclusion ...........................................................................................................................................................................12Annex: Analytical Framework and Methodology.........................................................................................................13 List of figures and tables Figure 1:Iran GDP per capita – 1960-2024 ....................................................................................................................................... 4Figure 2:Estimated Impact on HDI ...................................................................................................................................................... 6Figure 3:Estimated Impact on Poverty............................................................................................................................................... 8Figure 4:Inflation Trend in Iran .............................................................................................................................................................10Figure 5:Gap Between Years of Schooling and Learning Outcomes..................................................................................... 11Table 1:Simulated Impacts for Iran: Variation Relative to No-war Scenario (%) .................................................................... 5Table A-1:Simulation Assumptions......................................................................................................................................................13 UNDP is the leading United Nations organization fighting to end the injustice of poverty, inequality, and climate change.Working with our broad network of experts and partners in 170 countries, we help nations to build integrated, lastingsolutions for people and planet. The views expressed in this publication do not necessarily represent those of the United Nations, including UNDP, orthe UN Member States. Executive Summary The military escalation in the Middle East posessignificant r isks t o t he I slamic R epublic o f I ran’s(hereinafter referred to as ‘Iran’) economy and humandevelopment trajectory.The conflict has disrupted energyinfrastructure and maritime trade routes, including trafficthrough the Strait of Hormuz, where commercial shippinghas reportedly declined to near-halt conditions. Global oilprices increased by over 30 percent in the early phaseof the escalation, contributing to inflationary p ressuresand rising import costs. These shocks are unfolding in aneconomy already affected by macroeconomic volatility,declining purchasing power, and the effects of sanctions.Iran’s GDP per capita has fallen from over USD 8,000 in2012 to about USD 5,000 in 2024, reflecting a prolongederosion of living standards. Third, the conflict risks reversing recent gains in humandevelopment.Iran’s Human Development Index (0.799in 2023) could decline by 0.47–0.56 percentage points,equivalent to a loss of roughly one to one and a halfyears of human development progress, reflecting thecombined effects of declining national income, disruptionsto schooling, and conflict-related increases in mortalityand morbidity. The impacts may be particularly severe for householdsan