EXECUTIVE SUMMARY 1

Key Findings 1

Transmission Channels 1

Government Responses and Constraints 2

Policy and Programme Priorities 2

1. INTRODUCTION 3

1.1 From Escalation to Ceasefire 3

1.2 Transmission Channels 3

1.3 Uncertainty 4

1.4 Approach and Scope of this Report 4

2. TRANSMISSION CHANNELS 6

2.1 Energy Prices 7

2.2 Trade and Supply Chain Disruption 8

2.3 Food Security and Fertilizer 9

2.4 Remittances and Migrant Workers 10

2.5 Tourism 11

2.6 Fiscal Pressure and Subsidy Strain 12

3. IMPACT ANALYSIS 14

3.1 Income Losses 14

3.2 Human Development Index 15

3.3 Poverty 17

3.4 Food Security 18

3.5 Education and Health 20

3.6 Employment and Livelihoods 21

3.7 Gender Dimensions 24

4. GOVERNMENT RESPONSES 25

4.1 Supply Stabilization and Demand Management 25

4.2 Fiscal Cushioning and Price Stabilization 25

4.3 Monetary and Financial Responses 26

4.4 Early Adaptive Responses 26

4.5 Emerging Regional Cooperation 26

4.6 Structural Constraints 27

5. POLICY INVESTMENTS AND PROGRAMME IMPLICATIONS 28

5.1 Strengthen Shock-responsive Social Protection 28

5.2 Protect Livelihoods and Firm-level Resilience 29

5.3 Reduce Structural Exposure to External Shocks 30

5.4 Regional Cooperation 31

APPENDIX 1: UNDP ANALYTICAL FRAMEWORK AND ASSUMPTIONS 32

1.1 The GTAP 12 Global Database 32

1.2 The MIRAGE Global Computable General Equilibrium (CGE) Model 32

1.3 Modelling the Impacts of the Military Escalation in the Middle East 32

1.4 Human Development Estimations 33

1.5 Poverty Estimation 34

1.6 Interpretation and Limitations of the CGE Simulation Results 35

APPENDIX 2: ESTIMATED POVERTY IMPACT 36