The International Monetary Fund has revealed a significant disparity in the ability of Gulf economies to absorb oil and trade shocks, despite their large financial reserves, stressing that reserves alone are insufficient to ensure resilience against ongoing crises. IMF Middle East and Central Asia Department Director Jihad Azour stated that the region is facing its fifth economic shock in six years, necessitating a shift from emergency response to building more sustainable capacity to confront future risks.
Azour explained that Gulf economies benefited from six main buffers that mitigated the impact of the shock: diversification of oil export routes, economic activity diversification, financial reserves, rapid government intervention, Gulf cooperation, and institutional expertise. These factors are particularly important amid disruptions to navigation through the Strait of Hormuz, which have led to reduced oil exports, increased transportation and insurance costs, and supply chain disruptions.
The IMF forecast a GDP contraction of 3.3 percent for Saudi Arabia and 3.9 percent for the UAE, compared to larger contractions in Kuwait (16.7 percent), Qatar (15.6 percent), and Bahrain (11.3 percent), while Oman’s economy is expected to grow by 4.1 percent. This disparity reflects each country’s exposure to export disruptions, its ability to use alternative routes, and the nature of its productive structure.
Azour noted that Saudi Arabia demonstrated resilience thanks to its reserves and infrastructure investments, forecasting 7.9 percent economic growth in 2027. In contrast, Qatar and Kuwait face greater pressure due to export disruptions, while Oman benefits from its ports’ location outside the Strait of Hormuz. The IMF called on Gulf Cooperation Council countries to accelerate economic integration and develop joint infrastructure projects to enhance economic connectivity.
Source: Syrian Arab News Agency (SANA)
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