World Bank Cuts Gulf 2026 Growth Forecast to 1.3% as Iran War Batters Trade
Updated
Updated · The Conversation · May 14
World Bank Cuts Gulf 2026 Growth Forecast to 1.3% as Iran War Batters Trade
2 articles · Updated · The Conversation · May 14
The World Bank slashed its 2026 GDP growth forecast for Gulf Cooperation Council economies to 1.3% from 4.4% after the US-Israel war on Iran disrupted exports, transport and tourism across the region.
The damage is uneven: Qatar and Kuwait have been hit harder by the effective closure of the Strait of Hormuz, while Saudi Arabia and the UAE have partly bypassed it through pipelines carrying 7 million and 1.8 million barrels a day.
Around 80 energy facilities have been struck by Iranian missile and drone attacks, with repair costs estimated at $58 billion; QatarEnergy says fixing Ras Laffan alone could take up to five years.
The war is also hitting diversification sectors, with Dubai hotel occupancy seen falling to 10% from 80%, more than 30,000 Middle East flights canceled in the first month, and Jebel Ali vessel traffic down 40%.
Longer term, rising debt, Bahrain's negative Moody's outlook and likely draws on the Gulf's $4 trillion-$6 trillion sovereign wealth funds threaten reconstruction capacity, mega-projects and the region's safe-haven status.
As Iran threatens undersea internet cables, is the world's digital economy the next casualty of the Gulf war?
With Qatar crippled and Saudi Arabia profiting, how is the Gulf war reshaping the Middle East's balance of power?
Beyond oil shocks, is the Gulf conflict pushing the global food supply system toward an irreversible collapse?
Economic Fallout of the 2026 Middle East Conflict: Growth Downgrades, Energy Shocks, and Global Uncertainty
Overview
The latest conflict in the Middle East, often called the Iran war, has caused major economic instability worldwide. This crisis led to the closure of the Strait of Hormuz and the destruction of key energy infrastructure, disrupting markets and increasing financial volatility. As a result, organizations like the World Bank and IMF have sharply downgraded growth forecasts, especially for the MENAAP region, where growth is expected to slow dramatically. The Gulf Cooperation Council economies and Iraq are hit hardest, with the economic outlook for 2026 much weaker than previously projected. These shocks add to existing regional challenges and global uncertainty.