GCC Fiscal Resilience and Macroeconomic Stability During the Iran War

Why It Matters

The region’s disruptions threaten global energy and trade flows and could transmit inflation, tighter credit and slower growth worldwide; GCC fiscal resilience and liquidity strategies will be pivotal to regional stability and international markets.

Summary

Speakers at the Atlantic Council Mina Futures Lab warned that the Iran war is inflicting multi-channel macroeconomic damage on GCC economies through disrupted trade and logistics, higher insurance and rerouting costs, tighter financial conditions, input-price volatility and a hit to investor and consumer confidence. The Strait of Hormuz closures and security risks are constraining exports and imports of oil, refined products and industrial inputs, disproportionately affecting smaller and more geographically exposed states such as Bahrain, Kuwait and Qatar. Fiscal and sovereign-wealth buffers, debt levels and reserve liquidity will determine each country’s capacity to absorb shocks, while delayed private investment and supply-chain rerouting risk dragging growth and employment. Panelists emphasized the shock is policy-manageable if addressed early with coordinated fiscal, monetary and liquidity measures, but could produce persistent costs if left unchecked.

Original Description

This session examines the macroeconomic implications of the ongoing Middle East conflict for the economies of the Gulf Cooperation Council.