Vietnam must build resilience, says UNDP

Gross debt to GDP ratio

Years of human development gains across Asia-Pacific are under pressure as the impacts of the recent military escalation in the Middle East ripple through economies and households, despite a temporary ceasefire.

As the situation remains fluid, a current preliminary analysis by the UNDP examines how heightened volatility, transmitted through energy, trade, and labour markets, is straining incomes, consumption, jobs and social protection across the region. Low-income households, informal workers, migrants, and small enterprises are among the most at risk. Women are the most vulnerable across these categories.

The report, “Military Escalation in the Middle East: Human Development Impact Across Asia and the Pacific,” released in April, synthesises impact and needs assessments covering 36 countries, complemented by macroeconomic simulations, and provides a regionwide outlook as well as how different countries are currently responding to these pressures.

Rising fuel and freight costs are the most immediate pressure point. With over 80 per cent of crude and liquefied natural gas transiting the Strait of Hormuz destined for Asian markets, the region is experiencing rapid pass through of higher pricing on transport, electricity, food and fertiliser.

For an export-oriented economy like Vietnam, these fluctuations in global shipping and energy costs present a direct challenge to maintaining stable growth and protecting the purchasing power of citizens.

Informal employment in Asia and the Pacific, per cent of total employment, population aged 15+

The report estimates that 8.8 million people across the region are at risk of falling into poverty. Output losses could range from $97 billion to $299 billion, equivalent to between 0.3 and 0.8 per cent of regional GDP.

Governments across the region, including Vietnam, have responded rapidly to cushion the domestic shocks through fuel price stabilisation, targeted subsidies, and early adaptive measures such as diversifying energy supply and improving energy efficiency.

“The UNDP welcomes Vietnam timely response through emergency fiscal measures and pricing support to stabilise the economy,” said Ramla Khalidi, the UNDP's resident representative in Vietnam. “At the same time, we remain mindful of international experience that shows that prolonged fossil fuel support measures risk reversing the country’s energy transition goals. Accelerating the just energy transition is essential for Vietnam long-term energy security and to build resilience against global shocks”.

In other countries, human development losses under a short‑duration scenario range from weeks to months of foregone development progress. While Southeast Asia experiences comparatively smaller setbacks than South Asia, the report warns that disruptions could escalate significantly if they persist.

“The strain this war is placing across Asia-Pacific is already visible. It is reaching households faster than policy can adjust,” said Kanni Wignaraja, UN assistant secretary‑general and UNDP regional director for Asia-Pacific. “The resulting prolonged volatility in global markets is imposing increasingly difficult tradeoffs between stabilising prices, supporting vulnerable households, and maintaining essential public services and market investments. At the same time, we see important opportunities for countries to accelerate long‑term resilience through adaptive social protection, stronger local and regional value chains, and diversified energy and food systems.”

The report is part of a series of socioeconomic analyses produced by the UNDP to support policymakers to unpack the human development consequences of the current conflict, and identify options for a development response as a first line of defence.

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