War beyond the supply chain blockade

Nearly two months into the US-Israel war on Iran, with no end in sight, its aftermath is reverberating across the globe, as the growing risk of recession ripples through the food, energy, and consumer markets worldwide.
The effects are particularly burdensome for poor countries, which have the fewest resources. Nations in Africa, South Asia, Latin America, and parts of the Middle East that rely heavily on imports for most of their products and services face significant challenges in affording skyrocketing costs.
Supplies of oil, gas, fertilisers, and many other crucial commodities are unavailable due to the effective blockade of the Strait of Hormuz, a key shipping route, as well as damage to energy infrastructure throughout the Gulf region.
Farmers around the globe rely on fertilisers to maintain crop yields, and interruptions in supply chains could lead to food shortages. About 30 per cent of the world's supply of urea, a petrochemical-based product vital for agriculture, is said to transit the Strait of Hormuz.
According to a study published in the journal Global Food Security, the war is threatening the food security of millions of people worldwide.
“The Strait of Hormuz represents a critical chokepoint, whose disruption simultaneously increases fertiliser costs and raises food processing and cold-chain operating expenses,” the study points out.
At the same time, a new United Nations report estimates that the war could push an additional four million people across the Arab world into poverty and reduce the region’s output by more than $100 billion.
“A short-lived military escalation in the Middle East could generate profound and widespread socio-economic impacts across the Arab States region,” the authors of the UN report point out.
The overall loss could cause the regional unemployment rate to rise by as much as 4 percentage points, resulting in the loss of approximately 3.6 million jobs and pushing up to 4 million people into poverty, the report states.
The Guardian, citing an International Monetary Fund (IMF) report, stated that more than 32 million people worldwide could be plunged into poverty due to the economic fallout from the war, with developing countries expected to be hit hardest.
The Washington Post argues that the war’s economic fallout is landing hardest on more vulnerable economies outside the main conflict zone. Fragile nations and lower-income countries are especially vulnerable to price fluctuations, humanitarian consequences, funding shortages, and increased strain on already overburdened health systems.
According to the IMF’s latest World Economic Outlook, the war has halted the positive momentum in the global economy. Uncertainty about the war’s duration and the potential severity of damage to energy infrastructure in the region is unsettling governments, businesses, and consumers.
'Oil impacted importers, particularly non-resource-rich and fragile states, face deteriorating trade balances, rising living costs, and limited buffers to absorb future shocks,' warned Abebe Selassie, IMF Director for Africa, at a press conference on April 17.
The IMF now projects global growth of 3.1 per cent in 2026, a 0.2 percentage point downgrade from its January forecast. This modest revision assumes that the war will be “relatively short-lived,” it stated. Global inflation is also expected to rise to 4.4 per cent this year.
Fuel shortages have already spread across Africa, affecting countries from Ethiopia to Sierra Leone. In some nations, disruptions to fuel supply have impacted electricity generation and transportation, while soaring fertiliser prices have driven up food costs.
More than a third of sub-Saharan African countries are at high risk of, or already experiencing, debt distress, according to an IMF report. Additionally, in 21 countries, fiscal deficits exceed the levels required to stabilise debt.
If the indirect consequences are visible in the supply chain, another significant impact is on critical sectors such as healthcare and education, particularly in developing countries burdened with high levels of debt.
Heightened community instability and susceptibility may lead to greater poverty and reduced access to educational and health resources, as marginalised communities possess less ability to cope with health challenges over time.