The US and Israel’s war on Iran has cast a long shadow over the Gulf. It has placed many of the economies that make up the Gulf Cooperation Council (GCC) regional grouping – Bahrain, Kuwait, Oman, Qatar, the United Arab Emirates (UAE) and Saudi Arabia – under substantial strain.
Since the war began in February, the World Bank has downgraded its 2026 GDP growth forecast for the region from 4.4% to just 1.3%. Some thinktanks, including Oxford Economics, even predict that some GCC economies will enter recession in the second half of the year.
However, the effects of the war have differed across the region. While the Gulf states are often viewed as a unified economic bloc bound by a shared dependence on hydrocarbons, the conflict has revealed significant differences in their economic vulnerability and resilience.
