The World Bank on 11 June 2026 cut its forecast for Gulf Cooperation Council (GCC) growth this year to 1.3%, a downgrade of 3.1 percentage points from its January forecast, citing the Middle East conflict and the closure of the Strait of Hormuz, but projected a rebound to 5.2% in 2027, according to its June Global Economic Prospects report.
For the UAE, the lender forecast growth of 2.4% in 2026, a downgrade of 2.6 percentage points, and 4.1% in 2027, 1.0 point lower than previously forecast. It expects the UAE economy to grow 4.2% in 2028 and the GCC as a whole 4.0%.
WAR AND HORMUZ CLOSURE
The World Bank attributed the slowdown to the Middle East war, which began with US and Israeli attacks on Iran on 28 February 2026, and to the closure of the Strait of Hormuz.
The report also projected slower growth for the other Gulf economies this year, followed by stronger growth in 2027 and 2028.
“The conflict has taken a toll on global activity, but every crisis also brings an opportunity,” said Ayhan Kose, the World Bank's deputy chief economist.
At the global level, the World Bank expects growth to slow to 2.5% in 2026 from 2.9% in 2025, the weakest expansion since the Covid-19 pandemic, and projects Brent crude at an average of $94 a barrel this year, up from an earlier forecast of $86. It warned that global growth could drop to 1.3% if the fallout from the war spreads to financial markets.