The Iran war: assessing the hit to the Gulf economies

This Update takes three scenarios for how the conflict in the Middle East could play out and assesses the potential impact on the Gulf economies. In all cases, these economies would probably record negative growth this year. A short-lived conflict will probably result in falls in GDP of 1-2% this year. If the conflict is prolonged and involves lasting damage to energy infrastructure, the falls in GDP this year could be of the order of 10-15% – although probably mitigated somewhat by fiscal support. And the longer the conflict drags on, the larger the long-term effects are likely to be.