After the Iran war, the Gulf’s next economic phase awaits

(Khalid Azim – Atlantic Council) Whenever the conflict involving the United States, Israel, and Iran comes to a close, the Arab Gulf nations that comprise the Gulf Cooperation Council (GCC) must begin to construct a new economic reality. How will these economies reinvigorate growth, restore confidence, and position themselves for the next phase of development? All six GCC nations were affected, directly and indirectly, by the conflict. The most immediate economic impact stems from disruptions to commodity flows. Roughly one third of the world’s seaborne crude oil trade passes through the Strait of Hormuz, along with one fifth of liquefied natural gas (LNG) shipping, and 13 percent of seaborne chemicals trade, among many other vital commodities. The opportunity cost of disrupted exports is therefore material. Beyond these direct losses, second-order effects will ripple through tourism, real estate, transportation, and broader service sectors. While they will suffer a contraction in gross domestic product (GDP), most GCC countries have sizeable sovereign wealth funds, fiscal buffers, and access to capital markets. Bahrain remains the notable exception, given its elevated debt burden. These shocks are severe. But they can be overcome and managed, assuming the security situation with Iran can be resolved in a sustainable manner. The ongoing forces shaping the Gulf economies are structural, and they predate the current conflict. – After the Iran war, the Gulf’s next economic phase awaits – Atlantic Council