A month of high-intensity military escalation is enough to derail the Arab States’ development trajectory, according to a high-level UNDP preliminary assessment report (pdf), which estimates up to USD 194 bn in GDP losses across the region. The study warns that even a “short-lived” month-long conflict is currently generating profound, persistent socio-economic scars.

Regional GDP is estimated to contract by 3.7% to 6%. Economic shocks from trade, energy, and finance are exacerbating already existing systemic weaknesses in the region when it comes to “economic diversification, dependence on external markets, [labor] market composition, and fiscal capacity,” the report highlights. The impacts are mainly felt through higher prices and inflationary pressures, which will “erode real incomes.”

A surge in poverty will be the starkest human impact, with nearly 4 mn additional people at risk of falling below the poverty line under high-intensity scenarios. The Levant, Sudan, and Yemen are the epicenter, accounting for roughly 75% of this spike (up to 3.3 mn people).

There are wider human repercussions too: The Human Development Index (HDI), which measures key indicators like life expectancy, living standard, and education, is projected to drop by 0.2-0.4%, effectively erasing six to 12 months of development progress. In the Levant, that setback is more severe, potentially rolling back the clock by 1.5 years.

Unemployment is expected to rise by 1.8% to 4%, equivalent to 1.6 mn to 3.6 mn lost jobs. Unskilled workers are likely to bear the brunt of it, particularly in the GCC, where the labor market remains highly exposed to external shocks.

The GCC and the Levant face the sharpest macroeconomic contractions, with both subregions expected to lose between 5.2% and 8.7% of their GDP. Sustaining stability now requires moving beyond hydrocarbon-heavy balance sheets toward diversified production bases and “shock-proof” logistics capable of surviving a closed strait, UN Assistant Secretary-General and Director of the UNDP Regional Bureau for Arab States Abdallah Al Dardari explained.

MARKETS THIS MORNING-

Asia-Pacific markets are up this morning following hopeful comments from US President Donald Trump regarding a potential end to the Iran war. Japan’s Nikkei is up almost 4%, and South Korea’s Kospi rose by more than 6%. Over on Wall Street, futures are trading higher.

TASI

11,250

+0.7% (YTD: +7.2%)

MSCI Tadawul 30

1,514

+0.7% (YTD: +9.1%)

NomuC

22,705

-0.8% (YTD: -2.5%)

USD : SAR (SAMA)

USD 3.75 Sell

USD 3.75 Buy

Interest rates

4.25% repo

3.75% reverse repo

EGX30

45,322

+0.3% (YTD: +8.4%)

ADX

9,521

-0.1% (YTD: -4.7%)

DFM

5,434

-0.2% (YTD: -10.1%)

S&P 500

6,529

+2.9% (YTD: -4.6%)

FTSE 100

10,176

+0.5% (YTD: +2.5%)

Euro Stoxx 50

5,570

+0.5% (YTD: -3.8%)

Brent crude

USD 103.97

-3.2%

Natural gas (Nymex)

USD 2.89

+0.1%

Gold

USD 4,719

+0.9%

BTC

USD 68,252

+2.2% (YTD: -22.1%)

Sukuk/bond market index

914.04

-0.8% (YTD: -0.6%)

S&P MENA Bond & Sukuk

149.02

+0.2% (YTD: -1.9%)

VIX (Volatility Index)

25.27

-17.5% (YTD: +72.4%)

THE CLOSING BELL: TADAWUL-

The TASI rose 0.7% yesterday on turnover of SAR 7.2 bn. The index is up 7.2% YTD.

In the green: Cenomi Retail (+10.0%), Malath Ins. (+9.9%), and Saptco (+9.9%).

In the red: Theeb (-6.9%), Spimaco (-6.4%), and City Cement (-5.3%).

THE CLOSING BELL: NOMU-

The NomuC fell 0.8% yesterday on turnover of SAR 36.6 mn. The index is down 2.5% YTD.

In the green: Paper Home (+12.6%), Almodawat (+9.8%), and Alnaqool (+9.3%).

In the red: Altwijri (-18.7%), Lana (-10.0%), and Naas Petrol (-9.9%).

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