A Reuters poll found that most Gulf economies are expected to face deeper contractions this year than previously forecast before recovering in 2027, as fading hopes for a swift US-Iran de-escalation leave the Strait of Hormuz largely disrupted.

The 7-16 July survey of economists was conducted after many revised down expectations that Gulf shipping and energy exports would quickly return to normal.

Kuwait and Qatar recorded the largest downward revisions, with both economies now expected to contract 8.1% this year, compared with earlier forecasts of declines of 4.4% and 6.0% respectively in an April poll.

Bahrain’s economy is projected to shrink 5.1%, compared with the previous estimate of a 2.9% contraction, while the UAE economy is now expected to decline 0.5% after economists had previously forecast stagnation.

Saudi Arabia and Oman remain the only GCC economies expected to post growth this year, benefiting from lower exposure to Strait of Hormuz disruptions. Saudi Arabia can redirect oil exports through its East-West pipeline to the Red Sea, while Oman’s main export terminal lies outside the strait.

Saudi Arabia’s growth forecast was cut to 1.4% from 2.6%, below the IMF’s latest projection of 1.7%, while Oman’s outlook was upgraded to 3.1% from 2.2%.

Forecasts showed significant uncertainty, ranging from a 4.3% contraction to 4.1% growth for Saudi Arabia, and from a 2.1% decline to 4.1% expansion for Oman.

Economists expect a strong rebound across the Gulf in 2027, with Kuwait forecast to lead growth at 10.1%, followed by Qatar at 7.8%, Saudi Arabia at 6.0%, the UAE at 5.8%, Bahrain at 4.5%, and Oman at 2.8%.