Global growth forecasts fall as Strait of Hormuz blockage disrupts shipping
Updated
Updated · The Wall Street Journal · May 6
Global growth forecasts fall as Strait of Hormuz blockage disrupts shipping
11 articles · Updated · The Wall Street Journal · May 6
The longer the waterway stays shut, the higher recession risks become as markets watch for a return to normal shipping flows.
Earlier on Tuesday, the World Bank cut its 2026 Gulf growth forecast to 1.3% from 4.4%, citing disruption from the Iran war.
Moody’s Analytics has projected steep quarterly GDP falls across Gulf states, warning the conflict could damage public finances and 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.