The latest
Gulf economies have entered a phase of operational and investment caution.
Markets have recovered some of their losses, and oil revenues have eased pressure on state budgets. But businesses are facing rising costs in credit, shipping and insurance.
Iran’s attack on Kuwait International Airport on Wednesday sharpened those concerns. For companies, the war is no longer a distant geopolitical headline. It is a daily risk affecting investment plans, travel, financing and long-term commitments.
Details
* Saudi slowdown: The IMF expects Saudi growth to ease to about 2% this year. The latest PMI improved on domestic demand, but exports contracted for a third month, showing how the war is weighing on external trade.
* The UAE’s strategy: Deals by AD Ports Group and DP World in Brazil and the Dominican Republic point to a broader Emirati push to build logistics and trade depth beyond Gulf waters exposed to security risks.
* Oman as an alternative route: Oman’s location outside the Strait of Hormuz is giving it growing value as an alternative corridor for energy and trade. Muscat is also developing a new financial center to turn that position into a longer-term economic advantage.
* Banks turn cautious: Gulf companies are beginning to face tighter lending conditions. Some banks have reduced or withdrawn credit lines after the outbreak of fighting, moving the risk directly into corporate balance sheets.
* Property pressure: Construction, especially in Dubai, faces a tougher cost environment as raw materials, maritime insurance and air freight become more expensive. Some developers are now studying delays in project handovers.
* Non-oil revenues: Dubai’s move to apply VAT to road tolls and parking fees adds a steadier revenue stream for the government, at a time when tourism and business traffic could be hit by the war.
What to watch
The key indicator is the stability of traffic through the Strait of Hormuz.
A prolonged disruption would accelerate the use of alternative ports in Oman and Saudi Arabia, while pushing the UAE to expand its cross-continental trade networks more aggressively.
The three practical signals to watch are banks’ appetite for lending, shipping and construction costs, and the flow of tourism and business travel into Riyadh and Dubai. Together, they will show whether the slowdown is temporary or more structural.
