World Bank cuts Gulf 2026 GDP growth forecast to 1.3%
Updated
Updated · The Wall Street Journal · May 6
World Bank cuts Gulf 2026 GDP growth forecast to 1.3%
10 articles · Updated · The Wall Street Journal · May 6
The downgrade from January’s 4.4% forecast comes as the Iran war hits Gulf economies, with Moody’s Analytics projecting second-quarter GDP falls of 16% in Qatar and 12% in Kuwait.
Saudi Arabia and the UAE are seen as more insulated because they can reroute oil exports, but their economies are still forecast to contract 4% and 8% quarter on quarter.
The bank said the region faces its biggest economic hit since the pandemic, warning recovery costs could strain public finances, crowd out development priorities and damage investor confidence for years.
With billions in capital fleeing Dubai for Singapore, can the Gulf's 'safe-haven' status ever be truly restored?
How will the UAE's historic exit from OPEC reshape global energy markets and its rivalry with Saudi Arabia?
As US-Iran peace talks stall, what key demands are preventing a permanent end to this devastating conflict?
Middle East Economic Outlook 2026: $200 Billion Losses and Deep Scarring from Hormuz Closure and Conflict
Overview
In early 2026, the 39-day closure of the Strait of Hormuz and escalating conflict in the Middle East caused severe disruptions to oil exports, trade routes, and infrastructure, leading to a 70% drop in Iraq's oil production and widespread supply chain paralysis. This triggered extreme oil price volatility and global inflation, which, combined with damaged infrastructure and displaced populations, worsened pre-existing economic weaknesses. As a result, the World Bank sharply downgraded GCC growth projections to 1.3% for 2026, with Kuwait, Qatar, and Bahrain facing the hardest hits. The crisis also threatens long-term growth by delaying recovery, deepening fiscal pressures, and setting back energy transition efforts, underscoring that lasting peace is essential for regional and global economic stability.