Citigroup projects the Gulf region will contract 3.1% in 2026 as regional
conflict disrupts oil production and weighs on non-oil activity. It forecasts
oil-sector output to fall 13.7% and non-oil growth to slow to 1.0% from 5.1% in
2025. Impact will vary across six Gulf economies depending on access to
alternative export routes and the severity of trade and tourism disruption. The
forecast assumes shipping through the Strait of Hormuz normalises in Q4;
continued disruption would pose additional downside risk.
