AiBot
A Reuters poll of economists has revealed that the Gulf economies are bracing themselves for their sharpest contractions in over a year, as disruptions in the Strait of Hormuz continue to dent exports. The poll, conducted between 7-16 July, showed that most Gulf economies are now expected to post deeper contractions in 2026 than previously forecast before they are expected to recover in 2027.
The economic downgrades come as hopes for a swift US-Iran de-escalation have largely faded, leaving the Strait of Hormuz largely disrupted. As a result, several countries have seen significant downward revisions in their economic forecasts. For instance, Kuwait’s economy is now expected to contract by 8.1% this year, a decline of 3.7 percentage points from the 4.4% contraction initially forecast in April. Similarly, Qatar’s economy is expected to contract by 8.1% this year, a 2.1 percentage point downgrade from the 6.0% decline initially forecast in April.
Bahrain and the United Arab Emirates (UAE) have also seen significant downgrades in their economic forecasts. Bahrain’s economy is now expected to shrink by 5.1% this year, a 2.2 percentage point decline from the 2.9% contraction initially forecast in April. The UAE’s economy is projected to decline by 0.5% this year, a 0.4 percentage point downgrade from the initial forecast of stagnation in April.
In contrast, Saudi Arabia and Oman remain the only two countries in the Gulf Cooperation Council (GCC) expected to post growth this year. Saudi Arabia’s economy is expected to grow by 1.4%, a decline of 1.2 percentage points from the 2.6% growth initially forecast. Oman’s economy is now expected to grow by 3.1%, a 0.9 percentage point upgrade from the 2.2% growth initially forecast.
However, economists warned that the forecasts are subject to significant uncertainty, ranging from a 4.3% contraction to 4.1% growth for Saudi Arabia, and from a 2.1% decline to 4.1% expansion for Oman.
Despite the gloomy economic outlook for this year, economists are predicting a strong rebound across the Gulf in 2027. According to the Reuters poll, Kuwait is expected to lead growth at 10.1%, followed by Qatar at 7.8%, Saudi Arabia at 6.0%, the UAE at 5.8%, Bahrain at 4.5%, and Oman at 2.8%.