Week ending 17 October 2026: IMF sees Gulf economies shrinking as Hormuz attacks rise

The IMF released its October outlook on 13 October. It now expects the Middle East and Central Asia region to shrink 0.3% in 2026, against a 1.9% expansion projected in April, making it the only region forecast to contract. Prolonged disruption to shipping through the Strait of Hormuz is the main reason cited.

Country forecasts reported: Kuwait minus 16.7%, Qatar minus 15.6%, Bahrain minus 11.3% and Saudi Arabia minus 3.3%, the latter partly cushioned by redirecting oil exports through its East West pipeline. UAE and Oman figures were not reported in the coverage we could verify. Jihad Azour, the IMF’s Regional Director for the Middle East and Central Asia, said the region will not return to its pre war path in the medium term, citing scarring in sectors, infrastructure damage and extra spending needed for resilience.

Do this. If you lend to or trade with Kuwaiti, Qatari or Bahraini counterparties, review payment terms and credit limits now. Contracting economies tend to stretch payment cycles before they produce defaults, so shorter terms and tighter monitoring are cheaper than recoveries later.

UK Maritime Trade Operations (UKMTO) warnings counted 12 attacks on commercial vessels in and around the Strait of Hormuz and the Persian Gulf between 5 and 11 October, according to a 13 October report. On 11 October a drone struck the tanker Petro Dolphin at Sohar anchorage off Oman, two crew remain missing, and the Valthera was hit by a projectile and caught fire in the Strait. A separate tanker reportedly struck a naval mine.

Estimates of how much traffic is moving differ. One tracker puts the seven day average about 43% below pre conflict levels (citing Kpler data), while another report puts vessel traffic about 75% below. Either way, this reverses the recovery reported in our Edition 10.

Do this. Importers and exporters should price every shipment on a delivered, insured basis and ask forwarders for fresh quotes per voyage. Build extra days and extra cost into any financing request, because lenders are underwriting the delay as much as the goods.

Houthi missile and drone attacks on Riyadh’s King Khalid International Airport have forced a closure published through 17 October, with reported deaths ranging from 13 to 17 depending on the source. Cirium data shows about 46% of 8,883 scheduled Saudi departures between 8 and 15 October were cancelled or did not operate. On 16 October the GCC General Secretariat announced the postponement of the EU and GCC summit planned for Riyadh on 24 October, citing the attacks and the extended airport suspension. No new date was given.

The UK has also advised against all but essential travel to most Saudi airports.

Do this. If your supply chain or air freight runs through Riyadh, plan alternative entry points such as Dammam or Jeddah, and check whether your cargo and trade credit policies exclude war or political violence losses. Confirm in writing before you ship, not after.

Qatar Development Bank (QDB) raised its Logistics Support Fund to QAR 400 million (about USD 109.9 million) on 14 October, following private sector feedback. The fund gives non repayable grants covering up to 80% of shipping costs above pre disruption levels for Qatar based manufacturers across all sectors, for imports by air, sea and land. QDB has approved 436 applications to date, with 154 factories applying, and applications go through the Qatar Exports Portal.

Abdulrahman bin Hesham Al Sowaidi, QDB’s Chief Executive Officer, said the support helps manufacturers keep production running and offset higher costs for essential raw material imports. QDB plans to shift the fund towards export support once import logistics costs normalise.

Do this. Qatari manufacturers that import inputs should apply through the Qatar Exports Portal and keep freight invoices, pre disruption benchmarks and shipping documents organised. Grants are tied to the extra cost, so documentation decides the payout.

Foodics made a strategic investment in Funding Souq on 14 October, with the amount and stake undisclosed. The partnership lets Funding Souq offer embedded financing to Foodics’ restaurant and hospitality merchants, using sales and performance data to assess creditworthiness. Foodics plans to deploy USD 100 million through its Capital 2.0 financing product in the first year.

Funding Souq, founded in 2020, offers business loans, invoice financing and supplier financing in Saudi Arabia and the UAE, is regulated by the Saudi Central Bank and the Dubai Financial Services Authority, and aims to facilitate USD 1 billion of SME financing over three years. Martin Jaouni, its Founder and CEO, called the result Saudi Arabia’s first fully automated business loan. Anas AlGhanim, Vice President for Investments and Corporate Development at Foodics, said Funding Souq has significant potential to scale.

Do this. Restaurant and hospitality operators on Foodics should ask what sales history is needed to qualify and compare the offer with bank overdraft pricing. Data based lending rewards clean point of sale records.

Network International and Commercial Bank of Dubai (CBD) expanded their merchant lending partnership on 16 October beyond point of sale loans. Eligible UAE merchants and SMEs can now access commercial property financing to buy their own premises and short term working capital loans without collateral, with eligibility extended to smaller and newer businesses. No loan amounts or pricing were disclosed.

Görkem Köseoğlu, Group Chief Customer and AI Officer at Network International, said the aim is practical routes for merchants to invest, manage liquidity and scale.

Do this. UAE merchants processing cards through Network International should ask CBD whether their transaction history qualifies them for unsecured working capital. Without disclosed pricing, request a written quote and compare it with your current facility.

On 16 October National Bank of Bahrain (NBB) signed an MoU with Partior to assess NBB as a possible settlement bank, including how Bahraini dinar settlement could work on Partior’s blockchain network. It is at evaluation stage with no timeline. Humphrey Valenbreder, CEO of Partior, said the work explores adding dinar settlement to its network.

On 13 October NBB also agreed to use its Swift connection to reach TerraPay’s payout network of bank accounts, wallets and local payment systems, without building separate links to each market. Vineet Munot, NBB’s Group Head of Transaction Banking, spoke for the bank on both.

Do this. Bahraini SMEs that pay overseas suppliers or staff should ask NBB which corridors the TerraPay link will cover and what fees apply. Faster, cheaper payouts shorten the gap you need to finance.