Few economic impacts from Iran conflict outside Gulf Cooperation Council
The conflict in the Middle East will likely have significant implications for Gulf Cooperation Council (GCC) economies. But because the region accounts for less than 2 percent of world GDP, the economic spillovers to the rest of the world will be largely via higher gas and oil prices. We think higher energy prices from a moderate disruption in the Strait of Hormuz would only knock 0.1ppt off world GDP growth this year.
A moderate disruption could push the average oil price to almost $80 per barrel in Q2 before gradually falling back to a little more than $60 towards year-end, while gas prices would rise sharply too.
US and Eurozone CPI inflation would only average 0.3ppts–0.4ppts more in 2026, which will do little to crimp spending and is unlikely to prompt central banks to contemplate a significant change to their courses for policy rates.
The duration of the conflict and the nature of any regime change in Iran is key to understanding the economic impact, but these remain highly uncertain, with risks of a more pronounced spike in energy prices or significant adverse financial market reactions across the globe.
Gulf war risks worldwide economic shock
The Middle East once again stands on the verge of a dangerous escalation. What began as a confrontation between Iran and Israel risks evolving into a broader regional conflict involving the Gulf states and major global powers. Such a development would carry profound implications for global energy security and economic stability.
The big war clouds gathering over the Gulf are not merely a regional security concern. They represent a geopolitical confrontation with the potential to reshape global energy markets, international trade and economic stability. If the current escalation expands into a wider Gulf conflict, the shockwaves will be felt far beyond the Middle East.
The rapidly intensifying tensions in the region risk transforming what began as limited strikes and retaliatory attacks between Iran and Israel, backed by the United States and its allies, into a broader regional confrontation. Increasing missile and drone exchanges have heightened fears that the Gulf Cooperation Council (GCC) states may become directly involved. Should this happen, the Middle East could once again become the epicentre of a conflict with global consequences.
UAE and Japan finalize CEPA
The UAE and Japan have concluded negotiations on the final provisions of a Comprehensive Economic Partnership Agreement, marking the first such accord Japan has signed with an Arab nation.
According to the Emirates News Agency, the deal is designed to deepen trade and investment ties, with priority sectors including advanced technology, logistics, cybersecurity, healthcare, and education.
The UAE has solidified its position as Japan’s top trading partner in the Middle East and Africa, accounting for 39 percent of Japan’s total trade with Arab and African countries, while non-oil trade between the countries reached $20.3 billion in 2025, an annual growth of 16.7 percent.
The announcement followed an official visit to Japan by Sultan bin Ahmed Al-Jaber, the UAE’s minister of industry and advanced technology and envoy of the Minister of Foreign Affairs, who was accompanied by Thani bin Ahmed Al-Zeyoudi, minister of foreign trade.
The pair met with Toshimitsu Motegi, Japan’s minister of foreign affairs, to finalize the agreement, which underscores the shared commitment of both nations to fortify their longstanding strategic relations.
Al-Jaber emphasized that the successful negotiations reflect “the leadership’s vision to strengthen economic and trade relations with Japan and underscores the depth of the strategic partnership between our two countries. It also highlights our shared commitment to promoting innovation, industrial development, and sustainable economic growth.”
For the UAE economy, what a 48-hour market closure means
In a preventive move amid escalating regional tensions, the UAE has temporarily closed its financial markets for two trading days—Monday, 2 March and Tuesday, 3 March 2026, following heightened geopolitical developments in the Gulf.
The decision came after disruptions to regional airspace, security alerts, and retaliatory military exchanges between Iran and the US increased volatility across Gulf markets, prompting short-term stabilisation measures.
Reuters reported that Gulf markets, which remained open, experienced steep declines. Saudi Arabia’s benchmark fell more than 4 percent at one point, Oman and Egypt slid, and Kuwait suspended trading altogether, highlighting the scale of investor risk aversion tied to the escalation.
The suspension applies to the Abu Dhabi Securities Exchange (ADX) and the Dubai Financial Market (DFM), as announced by the UAE Capital Market Authority. In parallel, the Dubai Financial Services Authority (DFSA) confirmed the temporary closure of Nasdaq Dubai, the international exchange based in the Dubai International Financial Centre.
According to official statements, the decision was taken to implement the Authority’s supervisory and regulatory mandate over UAE capital markets, in accordance with applicable laws and regulations.
| Qatar Indicators | ||||||
|---|---|---|---|---|---|---|
| Details | Last | Previous | Highest | Lowest | Value in | Reference |
| Unemployment Rate | 0.1 | 0.1 | 3.9 | 0.1 | percent | Dec/24 |
| Population | 3.12 | 2.97 | 3.12 | 0.05 | Million | Dec/24 |
| Employed Persons | 2283539 | 2278286 | 2329133 | 310291 | – | Dec/24 |
| Minimum Wages | 1000 | 1000 | 1000 | 750 | QAR/Month | Jan/26 |