Goldman Sachs Warns: Iran War Could Lead to Worst Recession for Gulf Economies Since the 1990s

According to a report by Jinse Finance on March 16, as the Iran war continues, if the conflict does not end in the short term, major Gulf economies, including Saudi Arabia, the UAE, and Qatar, may face their worst economic recession since the 1990s. Farouk Soussa, an economist for Goldman Sachs in the Middle East and North Africa region, pointed out that if the conflict extends into April and results in a two-month closure of the Strait of Hormuz, Qatar and Kuwait's GDP could shrink by 14% this year. This would mark the most severe economic downturn for these two countries since the Gulf War in the early 1990s. In contrast, Saudi Arabia and the UAE are relatively better positioned as they have the capacity to transport oil through alternative routes. Nevertheless, these two countries could still face their most significant economic shock since the COVID-19 pandemic in 2020, with GDP expected to decline by approximately 3% and 5%, respectively. Soussa stated: "For many Gulf economies, the short-term impact of this war could be more severe than the pandemic. When the dust settles, they will rebuild and recover, but the scars left on market confidence by this conflict remain to be seen." (Jin10)