Gulf economies face downturn amid Iran war and Houthi attacks

Qatar: Qatar is a Gulf monarchy and major liquefied natural gas exporter that maintains significant sovereign wealth investments abroad through the Qatar Investment Authority. It is actively pursuing domestic diversification initiatives including national AI platforms and large-scale tourism developments. In this news, Qatar is highlighted as one of the leading Gulf economies facing severe contraction risks in 2026 due to the Iran war and related shipping disruptions, with its recovery dependent on attracting overseas capital. George Hay: George Hay is the EMEA Editor at Reuters Breakingviews, overseeing coverage across Europe, the Middle East, and Africa while specializing in the global energy transition. He previously coordinated European financial reporting during major crises and holds degrees in economics-related fields. He authored this commentary analyzing the Gulf's economic challenges amid the Iran war. Saudi Arabia: Saudi Arabia is the largest economy in the Gulf Cooperation Council and a top global oil producer that is implementing Vision 2030 to reduce reliance on hydrocarbons through major infrastructure and tourism projects. Its Public Investment Fund plays a central role in funding these initiatives alongside foreign partners. The commentary focuses on how the Iran conflict and Houthi attacks threaten Saudi's expected 2026 downturn and could delay normalization needed for events like the Future Investment Initiative. Afiq Fitri Alias: Afiq Fitri Alias is a data visualisation columnist at Reuters Breakingviews based in London, focusing on visual storytelling for business and economic stories. He joined Reuters in 2023 after working as a data journalist covering UK politics and international affairs. He contributed to the data-supported analysis in this Breakingviews piece on Gulf economies. United Arab Emirates: The United Arab Emirates is a federation of emirates in the Gulf known for its diversified economy centered on Dubai and Abu Dhabi, with key sovereign wealth entities including Mubadala, ADIA, and L’imad. It serves as a regional hub for tourism, aviation, and international business. The news underscores the UAE's vulnerability to the 2026 economic shrinkage from the war, alongside the need for sustained foreign investment to support its growth model. Recovery Prospects: Analysts project a potential strong economic rebound across the region in 2027 if shipping routes normalize and a durable peace framework emerges following regional elections. Geopolitical Tensions: Houthi missile strikes on key Saudi infrastructure illustrate the spillover risks from the ongoing Iran conflict into Gulf security and daily operations. Diversification Efforts: Gulf states continue advancing multi-year strategies to attract foreign partners for non-oil projects, including tourism and technology initiatives, as oil revenue recycling faces headwinds.