DUBAI (The Thursday Times) — The Iran war will cost the six Gulf Cooperation Council economies about $790 billion in lost output by 2030, credit insurer Allianz Trade said in a report released on Wednesday.
“The total cost of the war for the GCC is set to reach $790bn, a cumulative gap of 5.9% of GDP relative to the pre-war trend through 2030,” the report said. On top of that, it put physical damage at just over $200 billion, mostly to energy infrastructure in Kuwait, Qatar, and Bahrain, where more than 80 energy facilities have been hit since the war began.
Contraction this year
The insurer expects the GCC economy to shrink by 4% this year, more than eight percentage points below its pre-war forecast. Kuwait, Qatar, and Bahrain are set for the deepest falls. Saudi Arabia and the UAE are less exposed because they can export around the Strait of Hormuz, while Oman has gained as an alternative route.
Tourism flows fell 22% in the first half of the year, the report said, and Dubai property prices in September were 10.2% below their January peak. Inflation across the bloc is expected to more than double to 2.6%, driven by food.
Deficits and new priorities
Allianz Trade estimated a combined budget deficit of $475 billion over five years, to be covered by about $301 billion in new debt and drawdowns on reserves, with sovereign wealth funds a last resort. Bahrain faces the sharpest rise in borrowing costs.
It said spending was shifting away from the giga-projects of the Vision era towards pipelines and ports that bypass Hormuz, defence, power grids, water, and data centres, with $380 billion to $400 billion in new commitments.
Saudi Arabia, the region’s largest producer, has pushed its oil output to the highest level since the war began, according to OPEC figures.
Pakistan has a direct stake: the Gulf is home to millions of Pakistani workers and is the largest source of remittances, which rose 14% to $3.9 billion in October, led by Saudi Arabia.
