The World Bank has downgraded its 2026 economic growth forecast for the Middle East, warning that recovery will take time due to ongoing conflict and disruptions.
Regional GDP growth is now expected to slow to 1.8 percent, down from the earlier estimate of 3.6 percent. The report highlights that the closure of the Strait of Hormuz and damage to infrastructure have significantly disrupted trade, energy supply, and market stability.
Across the Gulf Cooperation Council, growth is projected to decline to 1.3 percent, largely due to reduced oil revenues. While Saudi Arabia is expected to remain relatively resilient with 3.1 percent growth, other economies face sharper downturns.
The United Arab Emirates is forecast to grow at 2.4 percent, down from 5 percent in 2025. Qatar is expected to contract significantly due to disruptions in LNG exports, while Kuwait faces a steep decline due to its dependence on Hormuz for oil exports.
Bahrain and Oman are also projected to see slower growth. Iraq is among the hardest hit, with a sharp economic contraction linked to reduced oil production.
World Bank Vice President Ousmane Dion stressed that peace and stability are essential for recovery, warning that prolonged conflict could drive up fuel and food prices and further weaken key sectors such as trade and tourism.
