Qatar cuts government budget
Qatar has cut government department budgets by up to 30 percent as the Gulf state grapples with the collapse in LNG revenues.
The figure was disclosed in a Financial Times report.
LNG is the foundation of the Qatar economy, historically generating tens of billions of dollars annually, and providing around 83 percent of total government revenue.
Surplus LNG profits fuel the Qatar Investment Authority, one of the world’s largest wealth funds, which can provide a buffer through the crisis.
Since the start of the war at the end of February, Ras Laffan production has impacted by missile strikes and shipping through the Strait of Hormuz has ground to a halt. Fewer than 20 ships transited the strait over the weekend.
Train 5 at Qatar’s Ras Laffan plant went offline earlier this month, according to Energy Aspects and Kayrros LNG intelligence monitoring.
The International Monetary Fund projects that Qatar’s economy will contract by 8.6 percent this year, representing the steepest economic decline among all six Gulf Cooperation Council (GCC) nations.
Combined lost energy revenues for Qatar and Kuwait are estimated by Goldman Sachs to be draining $1.5-$2bn per week. The ongoing tensions are creating a worsening humanitarian situation, according to the UN, and disruption to airline schedules, another key economic pillar for Qatar, Dubai and Abu Dhabi.
GCC & UAE economy & market update Aug- 2026
The MENA M&A market remained resilient in H1 2026, recording 390 transactions worth $46.7 billion. Although deal volumes declined compared with H1 2025, transaction values strengthened significantly, with Q2 deal value reaching $25 billion, more than double the prior-year period. Large transactions above $500 million accounted for a substantial share of activity, indicating a shift toward strategic, high-conviction investments. The UAE and Saudi Arabia remained the region’s leading outbound investors, supported by major cross-border transactions in aviation, chemicals, gaming, and technology.
The UAE real estate market continued to demonstrate resilience, with Dubai recording approximately AED 108.1 billion in total real estate transactions during Q2 2026. Residential transactions reached AED 83.88 billion, while off-plan properties continued to dominate activity. Despite a Y-o-Y decline in transaction volumes, Q2 remained the third-highest Q2 on record, while July residential sales reached AED 25.95 billion across 12,748 transactions.
Dubai economy under threat from ‘degraded’ Iran security condition
The United Arab Emirates’ suspension of commercial ties with Iran creates a “degraded security environment” that increases pressures on the Middle East’s second-largest economy, even as the direct impact on Emirati banks is likely to be minimal.
The UAE last week suspended trade and commercial ties with Iran after saying two ballistic missiles were fired towards its territory, the first such launches in three months. Iran denied involvement in the attacks.
The country is the single largest source of imports for Iran, accounting for more than 30 percent of total imports in 2024, according to Capital Economics, and is widely believed to have acted as a key conduit for Iranian financial flows.
A lot of imports to Iran are essentially re-exports through the UAE, according to Esfandyar Batmanghelidj, chief executive of the UK-based Bourse & Bazaar Foundation think-tank.
Oil prices little changed
Oil prices were little changed Wednesday after Iran’s hard-line Revolutionary Guard said Tehran has reached a deal with Oman to share control of the Strait of Hormuz.
Iran and Oman have agreed to share revenue generated from Hormuz, a Revolutionary Guard spokesman told the state news agency Tasnim. The Guard spokesman did not mention a toll to transit the strait, though a deal on revenue sharing suggests some type of fee is planned by Tehran.
Brent crude futures, the international benchmark, traded 74 cents lower to close at $87.84 a barrel. U.S. West Texas Intermediate crude lost 13 cents to settle at $82.23 per barrel.
Ships would enter the Persian Gulf through Iranian waters under the agreement, said Iran’s Deputy Foreign Minister Kazem Gharibabadi. They would exit through a joint corridor that crosses the territorial waters of Oman and Iran, Gharibabadi said, according to Tasnim.
Bahrain’s non-oil economy grows 2.2pc in q1
Bahrain’s non-oil economy grew 2.2 percent year on year in the first quarter of 2026, despite a contraction in overall gross domestic product amid regional disruptions, official data showed.
According to a quarterly report by the Ministry of Finance and National Economy, real GDP fell 3.8 percent year on year, driven largely by a 37.2 percent contraction in oil activities, linked to restrictions on maritime traffic through the Strait of Hormuz and scheduled maintenance, the Bahrain News Agency reported.
Non-oil activities held firm, accounting for 90.1 percent of real GDP, with nine of 13 non-oil sectors posting positive growth.
“The national economy witnessed a strong performance during January and February 2026,” the report noted, adding that average wages for Bahraini workers in the public and private sectors reached their highest level ever, driven by record growth in average monthly wages in the private sector.
Ashraf I. Jarrar, international broker and asset management at United Securities, told Arab News that the figures point to “an important distinction between a temporary external shock and the underlying structure of the economy.”
He noted that the ability of the non-oil economy to keep growing through a quarter marked by regional disruption was “a meaningful signal of resilience,” adding that diversification in Bahrain is “not only about reducing the share of oil in GDP, but about building a competitive business environment” that can keep generating activity even under external pressure.