Gulf Economies Torn by Iran War See Growth Plunge in Saudi Arabia, UAE

Saudi Arabia and the United Arab Emirates, which have spent years trying to diversify beyond oil, are facing a sharp slowdown as regional conflict involving Iran disrupts trade and investment. The two Gulf states had been pushing ambitious economic overhauls—from Saudi Arabia’s Vision 2030 to the UAE’s push into tourism, logistics, and technology—but the war has undercut those efforts. Growth rates have plunged in the past year, with non-oil sectors hit hard by shipping delays, higher insurance costs, and a pullback in foreign direct investment. Business confidence has wavered as the risk of wider escalation looms, threatening the stability that underpins their long-term plans. For economies that rely on global connectivity and safe passage through the Strait of Hormuz, the conflict is a direct threat to their core economic model. A return to normal is now seen as essential not just for regional security, but for the very survival of their diversification agendas. Without de-escalation, the Gulf’s post-oil future may be put on hold indefinitely.