A new report from the United Nations Development Program (UNDP) warns that military escalation in the Middle East could inflict $97 billion to $299 billion in economic losses across the Asia-Pacific region and push 8.8 million people into poverty.

The report highlights how rising volatility, transmitted through energy, trade and labor markets, is straining incomes, consumption, employment and social protection systems. It said that low-income households, informal workers, migrants and small businesses are particularly vulnerable, with women disproportionately affected across these groups.

Drawing on assessments from 36 countries and macroeconomic simulations, the UNDP report provides both a regional outlook and a snapshot of how different countries are responding to these pressures.

Rising fuel and freight costs are the most immediate concern. With more than 80% of crude oil and liquefied natural gas passing through the Strait of Hormuz destined for Asian markets, higher transport, electricity, food and fertilizer prices are quickly affecting households and businesses.

In Iran, the report estimates a decline in the Human Development Index equivalent to losing one to one and a half years of progress. Other countries could see losses ranging from weeks to months of foregone development gains under a short-term disruption scenario, though the impact could grow substantially if instability continues - especially in economies heavily reliant on remittances, imported energy and food.

South Asia faces the largest potential setbacks due to greater exposure to price shocks and limited policy buffers, while East and Southeast Asia are expected to experience comparatively smaller disruptions.

Kanni Wignaraja, UN Assistant Secretary-General and UNDP Regional Director for Asia and the Pacific, stressed the difficult choices facing governments. "The resulting prolonged volatility in global markets is imposing increasingly difficult tradeoffs between stabilizing prices, supporting vulnerable households, and maintaining essential public services and market investments," Wignaraja said.

"This is not about regular economic management measures, but a broader test of whether countries can look ahead and adapt fast to protect human development and human security gains in a far more volatile and insecure world," she said.