Iran War Delivers Middle East’s Biggest Economic Shock in Five Decades, Report Says

Iran War Delivers Middle East’s Biggest Economic Shock in Five Decades, Report Says
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The Iran war has caused the broadest economic shock to the Middle East and North Africa in at least 50 years, disrupting energy exports, trade routes and investment across economies worth nearly $4 trillion, according to an analysis by Asharq Business with Bloomberg.

The report, based on International Monetary Fund data going back to 1980, compares the current crisis with major regional upheavals including the Iran-Iraq war, Iraq’s invasion of Kuwait, the 2003 US-led invasion of Iraq, the 2011 Arab uprisings and the aftermath of the October 7, 2023 attacks.

According to the analysis, the conflict has directly affected 10 economies: Iran, the UAE, Saudi Arabia, Bahrain, Kuwait, Qatar, Oman, Iraq, Lebanon and Israel. Together, these economies represent about 70 percent of the Middle East and North Africa’s nominal GDP and around 3 percent of global output.

The war has disrupted oil and gas production and exports across several Gulf countries, Iraq and Iran, while also weighing on shipping, investor confidence and regional reconstruction plans. Bloomberg estimates cited in the report said OPEC production in May fell to its lowest level since 1985.

The analysis said recovery will depend on how quickly the war ends, whether the Strait of Hormuz fully reopens and how fast energy exports return to normal. A rebound in oil and gas output could produce a sharp recovery, but lasting stability will be essential for tourism, foreign investment, shipping and non-oil growth across the region.