The International Monetary Fund said that the economic impact of the ongoing conflict on Gulf Cooperation Council (GCC) states will depend on its duration, scope and intensity, with strong financial buffers and export flexibility expected to limit the fallout.
IMF spokeswoman Julie Kozack noted that outcomes will vary by country, largely depending on geographic location and the ability to resume exports. She explained that higher oil prices could help some countries offset production losses either partially or fully, depending on how quickly export flows recover.
She pointed to the Gulf’s substantial sovereign buffers and solid economic foundations, built through years of structural reforms aimed at diversifying income and strengthening logistics infrastructure. These measures have improved the region’s resilience to external shocks.
The IMF’s assessment broadly aligns with recent analysis by ratings agency Standard & Poor’s, which highlighted Saudi Arabia’s East–West pipeline as a strategic alternative export route that reduces reliance on key maritime chokepoints.
Elevated oil prices may also compensate for declining output, while the region’s large financial reserves are expected to support a swift recovery once the conflict subsides.
Kozack also highlighted pressure on regional financial markets, with Gulf stock indices declining and bond spreads widening in line with global volatility driven by inflation concerns and rising geopolitical risks.
Economists broadly view the region’s ample financial assets and foreign reserves as a buffer that will support a quicker rebound. Lessons from past energy crises have also helped Gulf states develop more flexible financial and logistics systems.
Standard & Poor’s recently underscored Saudi Arabia’s strong fiscal position and stable credit rating, citing substantial financial buffers and prudent policies. It also noted that alternative export routes such as the East–West pipeline allow the Kingdom to bypass the Strait of Hormuz, reducing risks to trade and growth.
Inflation risk
At the global level, the IMF is closely monitoring disruptions to energy markets, warning that sustained price increases could drive inflation higher and slow economic growth.
Oil and gas prices have surged by more than 50 percent over the past month, with Brent crude rising above $100 per barrel. If maintained for a year, this could push global inflation up by about 40 basis points and reduce economic output by between 0.1 and 0.2 percent, according to the Fund.
The IMF has signaled it stands ready to support member states, although no requests for emergency financing have been received so far.
It remains in close contact with finance ministers and central bank governors as the conflict enters its third week with no clear end in sight.
Kozack added that central banks should closely monitor whether inflation pressures extend beyond energy prices and whether inflation expectations remain stable.
The Fund is expected to incorporate the impact of the conflict into its updated global economic forecasts, due in mid-April during its Spring Meetings with the World Bank.
