Gulf Financial Paradise Falters as War with Iran Continues

The dream of the Gulf's economic success, symbolized by the United Arab Emirates, is faltering under the shadow of the war with Iran. Despite official attempts to downplay the conflict's impact, the signs of a potential sharp decline are evident. The closure of the Strait of Hormuz, a vital artery for global energy supply, and the persistent bombings across the Gulf have severely tested the resilience of regional economies, which are heavily dependent on energy revenues.

While rising oil prices might offer some buffer, they cannot compensate for the pervasive instability plaguing the Gulf Cooperation Council (GCC) states, particularly the UAE, which has been a beacon of economic growth in recent years. Economists are revising their forecasts, questioning the long-term viability of economies held hostage by a cycle of geopolitical upheavals. United Nations data paints a grim picture, suggesting that the region's five largest economies could collectively lose between $103 billion and $168 billion.

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Nous ne prévoyons pas un simple retour à la trajectoire de croissance d’avant-guerre…Le niveau du PIB qui émergera après la guerre sera nettement inférieur pendant les prochaines années, malgré une reprise relativement rapide…Il faudra toute la seconde moitié de l’année 2026 pour reconstruire les infrastructures endommagées et rétablir les chaînes d’approvisionnement.

The damage extends beyond oil sales, with refineries and gas plants also suffering significant blows. Experts anticipate a contraction in the GCC economies, with the UAE facing stagnation and a difficult recovery. Ralf Wiegert of S&P Global Market Intelligence forecasts that even after the war, it will take until the second half of 2026 to rebuild damaged infrastructure and restore supply chains, with GDP levels remaining significantly lower for years. The UNDP's regional analysis echoes this sentiment, predicting that investors will demand higher returns due to increased geopolitical risk, thus raising borrowing costs and diminishing the region's attractiveness for foreign direct investment.

This shift in perception could jeopardize the GCC's ambitions to diversify their economies and fund ambitious development projects. While these nations are accustomed to spending billions, the true cost of the war remains unspoken, yet the unease is palpable. For the UAE, an economy facing multiple challenges, this marks a critical juncture, especially just two months after a period of significant celebration.

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Même après la fin des hostilités, les investisseurs exigeront probablement des rendements plus élevés sur les financements accordés à ces pays pour compenser le risque géopolitique accru, ce qui augmentera les coûts d’emprunt à long terme et réduire l’attractivité de la région pour les investissements directs étrangers.