The war between Iran, the United States and Israel, which has spread to the Persian Gulf, is causing severe economic damage across the region. The International Monetary Fund has lowered growth forecasts for the Middle East to 1.1% in 2026, below the 3.2% projected for 2025. The blockade of the Strait of Hormuz, a crucial route for hydrocarbon exports, is depriving the region's monarchies of vital revenues.
The aviation, real estate, tourism, maritime transport and hotel sectors continue to be severely hit. High-profile events have been interrupted, luxury hotels are half empty, and war-related risks are deterring air passengers. Saudi Arabia moved the Riyadh World Esports Masters to Paris, Formula 1 cancelled the April race in the kingdom, and a music festival in the United Arab Emirates featuring Shakira was cancelled.
The impact varies significantly between countries. Iran, which suffered weeks of intense bombardment, is expected to see its GDP contract by 6.1% this year, while in Qatar, whose first liquefied natural gas production site was severely damaged, economic activity is expected to fall by 8.6% in 2026. Saudi Arabia is in a better situation thanks to access to the Red Sea, which allows it to bypass the Strait of Hormuz, expected to grow by 3.1% in 2026.
Dubai International Airport saw passenger traffic fall 31% in the first half of 2026, and hotel occupancy rates fell to 56%, compared to 80% in 2025. Wynn Resorts faces delays of several months in building the UAE's first casino resort, and several airlines extended the suspension of flights to Dubai. Despite the negative scenario, the United Arab Emirates continues to bet on cultural and musical events to recover visitor numbers.
