World Bank Expects Middle East Economy to Contract by 2.1% in 2026
A World Bank report projected that the Middle East economy will contract by 2.1% in 2026 due to the war, with an expected contraction of 4.3% for Gulf countries, 20.9% for Qatar, and 2% for Saudi Arabia.
A report issued by the World Bank projected that the economy of the Middle East region will contract by 2.1% in 2026, affected by the war with Iran, according to a report by "The National" newspaper. The projection comes in the Middle East and North Africa Economic Update periodically published by the bank.
The report estimated that the economies of the Gulf Cooperation Council (GCC) countries will contract by an average of 4.3%, projecting a 20.9% contraction for Qatar's economy and 2% for Saudi Arabia's economy. These figures show a significant disparity in the extent of the impact among the region's countries depending on their level of connection to oil activity and trade.
The report highlighted a "decline in tourism, aviation, and logistics" as a result of the disruption of the Strait of Hormuz, linking the economic slowdown to vital sectors upon which the region depends. A large portion of Gulf energy exports passes through the strait, making it a direct pressure point on these sectors and others.
The report assumes a gradual reopening of the strait starting next December 31, paving the way for a recovery in 2027. This development concerns governments, companies, and investors in the region, as the magnitude of the expected contraction will determine the path of public spending, employment, and investment in the coming year.
What do these terms mean?
**Gross Domestic Product (GDP):** The total value of goods and services produced by the economy of a country or region over a period, used to measure the size of the economy and its growth.
**Gulf Cooperation Council (GCC):** A bloc comprising six Arab Gulf states, whose economic performance is often measured as a single regional indicator.
**Strait of Hormuz:** A narrow waterway through which a large portion of Gulf oil and gas exports passes to global markets, and any disruption to it raises shipping costs and energy prices.
**Logistics:** Activities related to the transport, storage, and delivery of goods, including maritime and air freight and distributed warehouses.
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