The world is at an inflection point, as the number of state-based conflicts is the highest since World War II. And, they are becoming more difficult to win and increasingly expensive too. Beyond the immense human suffering, conflict represents a substantial economic burden through the displacement, dislocated trade, business uncertainty and destruction of infrastructure. According to the 2025 Global Peace Index (GPI), released by the Institute for Economics & Peace (IEP), the global economic impact of violence reached $19.97 trillion in 2024, while the countries worst affected by conflict have recorded drops in GDP of up to 30% in a single year. This figure is equivalent to 11.6% of the world's economic activity (gross world product) or $2,446 per person.
Global conflicts are so much more than just headlines. They continue to cause countless casualties and widespread devastation. Beneath the obvious destruction lie the economic costs that cripple nations and communities for decades. According to the Institute for Economics & Peace (IEP) report, the economic impact of violence on the global economy in 2024 was $19.97 trillion in purchasing power parity (PPP) terms. Military and internal security expenditure accounts for over 74% of the figure, with the impact of military spending alone accounting for $9 trillion in PPP terms in 2024. In this write-up, we look at some of the main costs associated with conflicts around the world.
Terrorism
The global expense on terrorism reached $8 billion in 2024, down $7 billion from the previous year. This includes the cost of security measures, emergency response and economic disruption. Efforts to combat terrorism require intelligence, policing and international cooperation. Terrorist attacks cost lives, reduce investment, interrupt trade and disrupt travel.
Peacekeeping
Peacekeeping operations cost $16 billion in 2024. These missions try to keep conflict zones stabilized, monitor ceasefires and prevent further escalation.
Peacekeeping missions require funding for personnel, transportation and equipment. However, they can prove to be a cost-effective way to prevent larger and more expensive conflicts.
Small arms
Small arms and light weapons cost $22 billion in 2024, a slight decrease from 2023. These weapons are used in local conflicts and may lead to increased unrest.
Controlling their spread is difficult as their scale evades local law and enforcement. Limiting their availability could save lives and reduce economic damage.
Peacebuilding
Peacebuilding programs cost $30 billion in 2024, down by $2 billion from the previous year. These efforts include protecting civilians, de-escalating disputes, facilitating political processes and improving governance. Insufficient investment in peacebuilding can ultimately increase the overall cost of conflict.
Conflict deaths
Deaths directly caused by conflict cost $56 billion in 2024. These figures account for lost income, medical care and the financial impact on communities. Each death also causes deep emotional and social harm that can't be measured in money. Survivors face long-term stress and trauma, leading to hidden costs.
Incarceration
Incarceration costs rose to $142 billion in 2024, with an increase of $2 billion from the previous year. Conflict and instability can lead to higher crime rates and an increase in the prison population. Prisons require continuous expenditure on facilities, staff and rehabilitation programs, as well as other resources and maintenance. High incarceration rates remove people from the workforce and place a burden on taxes and social programs.
Refugees and IDPs
The financial cost of refugees and displaced people reached $343 billion in 2024. The global refugee situation in the past decade shows the social and economic consequences of ongoing conflict. The costs include shelter, food, healthcare, education and security for millions of individuals and families forced to flee their homes. Refugee crises can strain public resources and create pressures on host countries and aid organizations.
GDP losses
Global conflicts caused $462 billion in lost GDP in 2024, a substantial increase of $141 billion from 2023. Conflict destroyed infrastructure, disrupted trade, caused a loss of labor productivity and reduced investment. Nations affected by war often see slower economic growth, which impacts employment and living standards. These losses can slow a country's growth as rebuilding the economy could take years.
Violent crime
Violent crime, such as assault, robbery and violence, cost $617 billion in 2024. These crimes increase when conflict affects communities or weakens the rule of law. Costs include healthcare, policing, lost productivity, rehabilitation and social services. High crime levels also discourage investment and slow economic growth.
Homicide
Homicide cost the world $1.1 trillion in 2024, a small drop compared to the previous year. This number includes medical costs and the long-term effects of violent deaths. In conflict zones, homicide rates often rise sharply. Beyond the economic toll, homicides create trauma that affects families and communities for generations.
Private security
Private security now costs $1.5 trillion worldwide, showing an increase of $20 billion from 2023. Large companies, wealthy individuals and even governments hire private guards to protect assets, infrastructure and people. The industry creates employment, but it also shifts responsibility away from public systems. In some countries, growing fear and instability push these costs higher.
Internal security expenditure
Expenses on internal security, including police, intelligence services and border enforcement, reached $5.7 trillion in 2024, increasing $50 billion from the previous year. These costs usually increase during times of social unrest, terrorism threats or domestic instability. While internal security is meant to protect people, it also shows how expensive it is to manage conflict within a country. Rising expenditures in this area often signal both growing security concerns and deeper social divides.
Military expenditure
Military spending is the highest cost of conflict. In 2024, countries spent $9 trillion on their military forces, which is $540 billion more than the year before. This includes expenses on salaries, equipment, operations and research. Rival countries may also try to outspend each other, which makes costs rise even faster.
Total global cost
Overall, the total economic impact of conflict reached $19.97 trillion in 2024, increasing by $717 billion from the previous year. The amount is more than the entire GDP of several developed economies. The number also indicates the long-term consequences that persist even after hostilities end.
Conclusion
Conflict is no longer a social or political issue. Reducing conflict could free up trillions for development, education, healthcare and environmental protection, as well as improving the quality of life of billions of people.
The writer is a Lahore-based academic.
Cost of Pakistan India May 2025 War
The four-day military standoff between Pakistan and India in May 2025 cost both nations an estimated $1 billion an hour or roughly $ 20 billion a day. During the war, the two nuclear-armed rivals engaged in the worst fighting between them since 1999, pounding each other with fighter aircraft, missiles, drones and artillery fire, until a ceasefire was brokered by the US and other nations. The military confrontation had in the meantime disrupted stock markets, led to airspace closures, escalated defense spending and caused economic losses amounting to billions of dollars.
