This figure, measured in purchasing power parity (PPP) terms, represents the losses arising from the difference between two scenarios that do not assume an immediate end to the war, according to the Institute for Economics and Peace’s Global Peace Index 2026 (IEP) report released Tuesday.
The study estimates the economic losses from conflict, violence and geopolitical instability in 2025, PR Newswire specified.
Conflicts are costing the world more than ever before
According to the new report Global Peace Index 2026, economic losses from violence have reached record levels and are equivalent to about 13% of global GDP. The authors of the study attribute the situation to the growing number of armed conflicts, increasing geopolitical fragmentation and expanding zones of instability in different regions of the world.
The military conflict around Iran has had a special impact on the global economy. Experts note that the war has affected energy markets, international logistics, transportation insurance and investment flows.
Even after the truce was reached, the consequences continue to affect the global economy through higher business costs and increased uncertainty.
The International Monetary Fund estimates that the conflict has already worsened the outlook for global economic growth in 2026. IMF head Kristalina Georgieva previously warned that even the most favorable settlement scenario would not completely avoid long-term negative consequences for the global economy.
Why the price of peace is becoming an economic factor
The authors of the study emphasize that modern economies are becoming increasingly sensitive to geopolitical risks. Supply chain disruptions, trade restrictions, rising defense costs and investor uncertainty reduce the potential for economic growth even in countries that are not directly involved in conflicts.
An additional factor is the concentration of risks around key transportation and energy routes. During the conflict over Iran, oil and gas shipments through the Strait of Hormuz, through which much of the world’s energy trade passes, came under severe pressure.
Experts note that for business the cost of instability is expressed not only in direct losses, but also in reduced investment, higher cost of capital and slower innovation. As a result, the economy loses potential growth that could have been achieved in a more predictable international environment, according to PR Newswire.
What the Peace Index shows
The IEP report records the highest level of conflict in decades. Researchers also highlight the emergence of new risk factors, including the use of artificial intelligence in military technology and increased competition between regional powers.
According to the authors of the study, the continuation of the trend towards geopolitical fragmentation may mean a further decline in global growth and an increase in economic costs for states, businesses and consumers.
