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GCC economies resilient despite Mideast war, S&P says
🇸🇦 Saudi Arabia /Economy & Trade

GCC economies resilient despite Mideast war, S&P says

From Asharq Al-Awsat · () English

Translated from English, summarized and contextualized by DistantNews.

At a glance

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  • GCC economies show resilience against geopolitical uncertainty due to strong foundations and liquidity buffers.
  • S&P forecasts a temporary slowdown in 2026 before a strong recovery in 2027, with stable outlooks on sovereign ratings.
  • The region's banking sector remains stable, supported by deposit growth and solid capital buffers.

Gulf Cooperation Council (GCC) economies possess strong foundations that enable them to weather the fallout from Middle East conflicts, according to a Standard & Poor’s Global Ratings report. The agency highlighted robust net asset positions and liquidity buffers as key strengths, projecting stable outlooks on GCC sovereign ratings.

We anticipate a pronounced dip in GDP growth in 2026 followed by a strong recovery, with average real GDP growth of about 5.3% in 2027.

— S&P Global RatingsThe agency's projection for GCC economic growth in the coming years.

S&P anticipates a temporary slowdown in GCC growth in 2026, with a projected average real GDP growth of about 5.3% in 2027. The agency's base case assumes that supply disruptions in the Strait of Hormuz will ease in the second half of 2026, with oil shipments averaging around 75% of pre-war volumes. Brent crude is expected to average $110 per barrel for the remainder of 2026 and $80/bbl in 2027.

The ability to recover varies across GCC nations. S&P noted that four of the six GCC sovereigns have net assets exceeding annual GDP, indicating a greater capacity for resilience in countries like the UAE, Saudi Arabia, Kuwait, and Qatar compared to Bahrain and Oman. However, Oman's geography outside the Strait of Hormuz may offer additional benefits beyond hydrocarbons.

We expect oil shipments during that period will average about 75% of the pre-war volumes and that Brent crude will average $110 per barrel (/bbl) for the remainder of 2026 and $80/bbl for 2027.

— S&P Global RatingsThe agency's assumptions regarding oil supply and pricing following potential disruptions.

In the banking sector, S&P considers GCC banks' credit quality to be stable. This stability is supported by deposit growth, which provides funding stability, and solid capital buffers that mitigate risks. The report, titled “Middle East War: GCC Sensitivity and Sector Vulnerabilities Aren't Homogenous,” also forecasts that GCC oil production will exceed pre-war levels between 2027 and 2029.

We consider GCC banks' credit quality to be stable, supported by deposit growth that offers funding stability and solid capital buffers that mitigate risks from po

— S&P Global RatingsThe agency's assessment of the GCC banking sector's stability.
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Originally published by Asharq Al-Awsat in English. Translated, summarized, and contextualized by our editorial team with added local perspective. Read our editorial standards.

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