Iran-US War Costs World Economy $3.5 Trillion; Toll May Rise The Longer Conflict Lasts: Global Peace Index 2026 Report
The Institute for Economics and Peace said in its Global Peace Index 2026 report, released on Tuesday, found that the war in West Asia is costing the global economy up to $3.5 trillion a year. The development could even threaten food supplies across South Asia and East Africa, according to the 2026 Global Peace Index (GPI), the report added.
The conflict could destroy nine of the region’s economies, which include Iran, Israel, Iraq and six GCC countries, stripping them of nearly $493 billion in output within the first year alone, equivalent to 6.2 percent of their combined GDP.
The amount of loss could increase the longer the conflict drags on, the study pointed out. The figure, measured in terms of purchasing power parity (PPP), represents the loss resulting from the gap between two scenarios that do not involve an immediate end to the war. PPP is a way to compare economies by looking at what money can actually buy, not just exchange rates.The idea$100 buys way more in India than in the US.
The $3.5 trillion loss assumes the war continues, based on purchasing power parity, the Institute for Economics and Peace said Tuesday in its 2026 Global Peace Index.
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Thus, the annual global GDP losses from the war would total $1.3 trillion under a partial reopening of the Strait of Hormuz but would amount to $3.5 trillion if the war resumes, the report added. Other countries are also likely to be impacted to different degrees, with fragile, high-debt energy importers particularly likely to be heavily impacted.
