The U.N. says the U.S.–Israel war on Iran could push as many as 32.5 million people into poverty. Higher fuel and food prices, plus a drop in remittances, are squeezing household budgets worldwide, the U.N. warned.

Rising costs, falling incomes

Fuel costs have risen for consumers and businesses worldwide. Food is harder to buy. At the same time, work is disappearing in some places and money sent home by migrants and workers abroad is drying up. Those parallel trends are shrinking household budgets and pushing vulnerable families toward poverty.

  • Higher fuel prices raise transport and production costs, which pushes up prices for basic goods including food.
  • When remittances fall, many households lose a steady source of income for food, health care and school fees.

Why the Global South is especially exposed

Many developing countries import fuel, grain and staples from Gulf producers and global markets tied to Middle East supply. That trade exposure makes them vulnerable when conflict perturbs supplies or raises freight and insurance costs. Governments in those countries often have limited fiscal room to cushion price shocks with subsidies or emergency cash transfers.

  • Price increases are amplified where public revenues fall and economic activity slows.
  • International aid — which fragile states rely on for health, food assistance and safety nets — is reportedly becoming scarcer as donors face competing demands tied to the conflict.

Jobs, remittances and the safety net

Work losses are an immediate channel pushing people toward poverty. Businesses that rely on imported inputs face higher bills and may cut staff or scale back operations, reducing household earnings and local spending. For many families, remittances have been a buffer against shocks; as those flows shrink, that buffer disappears.

Governments are already under pressure to respond. Some are redirecting budgets to subsidize fuel or food, while others are cutting nonessential spending. With international aid thinning, national authorities have fewer external options to support vulnerable populations.

Economic and political consequences

The immediate economic consequence is higher living costs and faster household impoverishment in exposed countries, which erodes public confidence in policymakers. Limited fiscal space means short-lived price shocks can have long-term impacts, forcing trade-offs among social spending, debt payments and subsidies.

How the conflict touches the United States

The United States is a party to the conflict, so the economic ripples are not confined to distant markets. Global fuel and food price moves feed into world markets and can translate into higher energy and grocery bills for U.S. consumers, as well as add upward pressure on global inflation measures that U.S. policymakers monitor. Political pressure on U.S. leaders can rise as global costs affect domestic conditions.

If sustained, these shocks threaten to reverse recent gains in poverty reduction across the Global South and could force cash-strapped governments to choose between social programs and debt repayments — a dynamic the body of the U.N. warning already signals.

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The U.N. warned the conflict could push as many as 32.5 million people back into poverty.

This article was created with AI assistance.