MEcon | May 2026 Edition

Saudi Arabia 

Emerging impacts of the conflict are starting to show in KSA’s Q1 2026 results: real GDP growth slowed as non-oil and government activity softened despite stronger oil output, while fiscal policy remained geared toward development and social priorities, contributing to the budget deficit reaching a five-year high. Financing conditions remain stable, with the Kingdom completing its 2026 annual borrowing plan and Moody’s reaffirming KSA’s Aa3 (stable) rating. Looking ahead, tighter spending discipline—and potentially additional issuance—may be needed if the deficit exceeds projections.

UAE

The UAE sustained strong growth momentum in 2025, led by non-oil sectors, but recent indicators suggest some cooling as conflict-related shipping disruptions weigh on exports and push up input costs. Policymakers are balancing near-term financial stabilization with longer-term energy export resilience, including steps to reduce reliance on Strait of Hormuz routes. Concurrently, domestic capital is increasingly powering the industrial agenda, with “Make it in the Emirates” translating “Operation 300bn” from ambition into execution. 

Qatar

Qatar’s non-hydrocarbon economy remains under pressure from the regional conflict, with non-energy PMI and inbound tourism still in contraction in April 2026, though showing modest improvement from March. Fiscal performance also weakened in Q1 2026, with a larger deficit driven by lower hydrocarbon revenues. Against this backdrop, the Qatar Investment Authority continues to invest globally to diversify holdings and support long-term domestic capability building.

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