ESCWA: The war on Gaza and the Sudan conflict are weighing heavily on Arab economies

Lebanon – The United Nations Economic and Social Commission for Western Asia (ESCWA) issued its annual report entitled “Survey of Economic and Social Developments in the Arab Region,” which paints a bleak picture of the region’s economic prospects amid ongoing conflicts.

ESCWA said that the economic landscape in the Arab region faces major headwinds due to ongoing conflicts, as the war on Gaza, the war in Ukraine, and the conflict in Sudan have exacerbated the state of uncertainty at the global level.

The latest findings – reached by ESCWA – reveal that the war on Gaza and the conflict in Sudan are inflicting heavy losses on Arab economies, hindering growth and exacerbating poverty.

According to this committee, it was initially expected that the region’s GDP would grow by 3.6% in 2024, and 4.2% in 2025. But it has now revised its expectations based on developments so that the region’s GDP will achieve a modest growth of only 3.3% for the year 2024.

Poverty rates have risen in low-income Arab countries affected by conflicts

According to the report, poverty rates in low-income Arab countries and those affected by conflicts jumped from 56% and 45% in 2019 to about 63% and 50% in 2023. The war on Gaza threatens to plunge the entire population of the Strip, that is, about 2.3 million Palestinians, into multidimensional poverty. It will affect the entire State of Palestine, in addition to Lebanon.

The supervisor of the report preparation team, Ahmed Mumi, confirmed that the situation in the Arab countries affected by conflicts is still unclear, and is overshadowed by the repercussions of the war on Gaza, security concerns, and political divisions. He warned that this war, in which the occupation army is practicing a severe level of violence against Palestinian civilians, is plunging the sector into difficult economic and social conditions that have spread across the entire State of Palestine, as the huge number of deaths and injuries and overwhelming destruction is expected to push the country back 10 to 15 years. .

While the outlook for the least developed Arab countries remains bleak, and this is exacerbated by the continuation of the war on Gaza and the continuation of the escalating conflict in Sudan. ESCWA indicates a potential decline in the average gross domestic product by 3.8% during the period 2023-2025 in the least developed Arab countries, with the fiscal deficit expected to improve marginally as social and economic challenges continue.

The situation in conflict-affected Arab countries is unclear

Inflation is another concern, reaching 12.3% in 2023 primarily due to disruptions in the Black Sea Grains Initiative, which affected the prices of basic foodstuffs imported by Arab countries. Although inflation is expected to decline to about 7.5% and 6% in 2024 and 2025, respectively, containing its negative effects remains an urgent priority, especially through wise monetary and financial policies.

Unemployment, especially among youth, remains a major challenge, with the overall unemployment rate among this age group reaching 26.4%, further highlighting the urgent need to address economic disparities.

ESCWA stresses the need for coordinated strategies to address internal displacement, and calls for increased regional cooperation to deal with this scene. She called for these strategies to include humanitarian needs, economic resilience, and social integration.