Double-Digit Pain Ahead for Gulf Economies? What Data Shows
The IMF warns that ongoing Middle East conflicts could lead to significant economic contractions for major oil-exporting nations like Kuwait, Iraq, and Qatar by 2026. Disruptions to energy production and global supply chains are cited as primary drivers for this potential regional downturn.
Why it matters
The findings highlight the vulnerability of global energy markets and regional economies to geopolitical instability and supply chain shocks.
The war involving Israel, the US and Iran is set to leave a deep economic scar across the Middle East, particularly in countries that rely heavily on oil exports. Disruptions to energy production, trade routes and shipping, along with attacks on critical oil infrastructure, have weighed heavily on economic activity across the region. According to the International Monetary Fund (IMF), Kuwait, Iraq, Qatar and Bahrain could suffer double-digit economic contractions this year, while the economies of Iran, the UAE and Saudi Arabia may shrink by 3 to 8 per cent in 2026.Estimates suggest that Kuwait's real Gross Domestic Product (GDP) could contract by 16.7 per cent in 2026, followed by Iraq (16 per cent), Qatar (15.6 per cent) and Bahrain (11.3 per cent), on an annual basis."The escalation of the war in the Middle East has delivered a substantial shock through disruptions to energy production, shipping, tourism, trade and confidence.…
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