Olga Ponomareva, expert at the Economic Policy Foundation, commented to TASS on the potential economic consequences of a military conflict in the Middle East for the Gulf states. According to her assessment, an escalation could significantly revise the previously optimistic forecasts for regional economic growth.
“Positive forecasts for regional GDP growth in the Gulf states will likely be revised downward; in the fall, the International Monetary Fund projected regional GDP growth at 4.3%, with non-oil GDP growth at 3.6%. Depending on how the situation unfolds, the region could see its growth forecasts reduced by about 0.5–1 p.p.,” says Olga Ponomareva.
According to the expert, the key factor will be the duration of hostilities, which is currently difficult to assess. A protracted conflict, in her view, will intensify capital flight from Middle Eastern countries, which will affect financial and currency stability.
The expert also drew attention to the growing risks facing the financial sector. She emphasized that even in the absence of direct attacks on banks, financial institutions are already facing turbulence. “Direct physical threats to banking infrastructure will undoubtedly lead to further capital flight, negative economic growth forecasts, and a downgrade of sovereign credit ratings for the previously reliable and stable economies of the Middle East region, such as the UAE, Qatar, and Kuwait,” said Olga Ponomareva.
“Given that Iran’s announced targets include not only banks but also divisions of major U.S. technology companies such as Google, Microsoft, Oracle, Nvidia, and others, the negative consequences for the region’s economies are becoming more widespread and profound,” the expert noted.