JPMorgan has lowered its non-oil economic growth estimates for Gulf Cooperation Council (GCC) nations in 2026, following recent escalations in the Middle East conflict involving Iran. The Wall Street bank cautioned that the situation remains volatile and that further downward revisions could be necessary depending on how the conflict develops.
Growth Outlook Adjusted
The bank trimmed its non-oil sector growth forecast by 0.3 percentage points across the GCC region. Bahrain and the United Arab Emirates (UAE) were the most affected, with reductions of 0.5 and 0.4 percentage points respectively, reflecting heightened economic vulnerability amidst regional unrest.
Uncertain Risks Amid Conflict
JPMorgan analysts underscored the elevated risks impacting the Gulf economies, which hinge significantly on the outcomes of the ongoing conflict. The uncertainty surrounding geopolitical tensions is contributing to a cautious economic forecast and underscores the challenges facing these countries.
Monetary Policy Revisions
In addition to revising growth projections, JPMorgan adjusted its expectations for monetary policy in the region. It no longer anticipates a rate cut by Turkey’s central bank at its scheduled meeting on March 12, amending its year-end policy rate forecast to 31%, up from 30%, with inflation now projected at 25% rather than 24%. Similarly, the Bank of Israel is unlikely to reduce rates in March due to its direct involvement in the conflict.
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