Amid a state of “neither war nor peace” between the United States and Iran, Gulf countries are attempting to resume their economic activity. Within just a few weeks, governments in the region have announced investment packages, cross-border agreements, and new regulatory adjustments, in a clear effort to demonstrate that the war has not broken the momentum of their economies nor diminished their ability to attract capital.
These moves do not appear to be merely a natural return to economic activity after tensions subsided, but rather an attempt to send a message to markets that the Gulf remains capable of absorbing shocks, continuing its major projects, and maintaining its image as a relatively safe investment destination, despite the war and its direct repercussions on Gulf states themselves.
Kuwaiti economist Dr. Ali Al-Anzi says that the rapid return after the truce reflects Gulf countries’ determination to prevent geopolitical tensions from reshaping their economic image. He believes the recent moves carry clear signals to global markets about the region’s ability to continue implementing its projects and ensuring capital flows.
These actions come at a time when recent data showed a slowdown in growth in the first quarter of 2026, driven by the repercussions of the war and a decline in non-oil activities, revealing the sensitivity of Gulf economies to any prolonged disruption in confidence or investment.
Al-Anzi says that restoring confidence cannot be separated from the region’s economic transformation paths, from Vision 2030 and 2040 to the expansion of sectors such as trade, tourism, technology, and artificial intelligence in countries like the UAE, Qatar, and Kuwait. These sectors, he adds, require stability, continuous investment flows, and capital spending that does not halt at the first crisis.
For his part, Omani economist Khalfan Al-Touqi believes that the drivers of this acceleration are not limited to compensating for war losses but are also linked to repairing the economic reputation of the region’s countries after a shock that was not limited in scope. He says that some prominent economic models, such as Dubai, were affected to varying degrees, making economic and political repositioning an urgent matter.
Al-Touqi adds that Gulf countries are trying to benefit from the crisis as an opportunity to rearrange their priorities, noting that damage in such cases remains, but the difference lies in the speed of recovery and the management of losses.
The United Nations Development Programme had expected the economies of the Gulf Cooperation Council, including Qatar, Saudi Arabia, and the UAE, to record a contraction in GDP ranging between 5.2 and 8.5 percent, equivalent to losses between $103 billion and $168 billion.
Oxford Economics also reduced its forecast for real GDP growth in GCC countries for 2026 by about 4.6 percentage points compared to pre-war estimates, turning expected growth into negative 0.2 percent, due to declines in oil production, exports, and tourism.
Within a short period, more than one Gulf country has taken notable economic steps. The economic partnership agreement between the UAE and South Korea entered into force, Dubai amended conditions for real estate investor residency, and the UAE launched a program to enhance supply chain resilience. Abu Dhabi also discussed frameworks for cooperation with Russia to establish a grain exchange within the “BRICS” group, signaling growing interest in economic security and ensuring supply sustainability.
In Saudi Arabia, Riyadh announced the redirection of a larger share of Public Investment Fund investments toward the domestic market, within a strategy focused on diversifying the economy and reducing dependence on oil.
Movements also emerged in the energy sector in Kuwait, including financing arrangements worth billions of dollars linked to an oil pipeline network, along with discussions about selling a stake in these assets.
In Qatar, the Qatar Financial Centre approved a package of measures to support companies registered with it. These included extending deadlines for submitting audited financial statements, implementing flexible mechanisms to adjust tax filing schedules, and providing temporary arrangements for dedicated workspace for startups, with the aim of enabling them to continue their activities under exceptional circumstances.
These steps, despite differing from one country to another, aim to quickly restore economic rhythm and prevent the war from becoming a long-term factor in investors’ calculations.
Saudi economist Abdullah Al-Jubaili says that recovery is not proceeding at the same pace across all Gulf countries, due to differences in the degree of impact from the war and the continuation of some challenges related to shipping lanes. However, he points out that Saudi Arabia played a role in supporting the stability of energy markets by operating the East-West pipeline at full capacity during the escalation period.
Al-Jubaili believes that Gulf countries adopted a defensive approach during the war and avoided engaging in offensive operations, in order to maintain the confidence of foreign investors and avoid sending any signals that might be interpreted as risking capital.
He adds that economic transformation paths, particularly in Saudi Arabia, showed a degree of resilience during the period of tension. He cites the performance of the Saudi stock market, which did not record prolonged declines, but instead dropped at the beginning of events before rising again by about 1,200 to 1,400 points from its lowest levels, indicating continued confidence in the market, according to him.
With the return of economic activity, an old question emerges: Are Gulf countries entering a new phase of economic competition after the truce, or will the crisis push them toward greater integration?
Al-Jubaili says that the relationship between Saudi Arabia and the UAE cannot be described as purely economic competition but rather falls within a framework of integration governed by shared interests within a single geographic scope, despite differences in some political files.
He adds that the current phase may witness a degree of coolness, but does not reach the level of rupture, suggesting that any return to political activity will positively reflect on economic activity among the countries of the region.
In contrast, Al-Anzi believes that the coming phase may carry clearer signs of a return to Gulf economic competition, particularly between Saudi Arabia and the UAE, as two of the largest economies in the region. However, he does not see this competition as necessarily negative, but rather as an expression of each country’s desire to establish itself as a safer and more attractive investment destination after the crisis.
He points out that energy and investment files may move at a faster pace in the coming period, as some countries seek to compensate for declining oil revenues and the effects of the war on their economic sectors.
Al-Touqi, for his part, believes that Gulf economic competition will be reshaped, not eliminated. Some sectors will witness competition, while others will impose a greater degree of integration.
He cites regional projects previously proposed between the Sultanate of Oman and several Gulf countries, including an oil pipeline project linking these countries to the Omani port of Duqm, which enjoys a strategic location outside the zone of tension in the Strait of Hormuz.
Al-Touqi says these projects had not previously received sufficient priority, due to the assumption that navigation through the Strait of Hormuz would continue without major disruption. However, recent developments may push Gulf countries to reconsider cross-border infrastructure projects and grant them greater attention.
In the end, the truce does not appear to be the end of the crisis so much as the beginning of a new test for Gulf countries. The war revealed the fragility of some trajectories, but it also pushed governments to move quickly to stabilize confidence, protect their credit image, and convince investors that the region remains capable of functioning even amid tension.
The article is a translation of the original Arabic.
Sakina Abdallah
A Saudi writer, researcher, and TV presenter
