JPMorgan has lowered its 2026 non-oil growth outlook for Gulf Cooperation Council economies by 0.3 percentage points, citing heightened regional risks following the latest Middle East escalation. The U.S. and Israeli attack on Iran has increased uncertainty across the region, with oil and sentiment acting as the main channels of impact globally. While global effects could prove short-lived, JPMorgan strategists warn that regional uncertainty is likely to linger and weigh on activity.

Against this backdrop, JPMorgan sees the GCC as the most exposed part of the EMEA emerging market universe. The strategists said they are making "only limited forecast changes for now," but have already moved to lower near-term expectations for non-oil activity. Economic life slowed sharply in major hubs close to Iran, including Manama, Doha, Abu Dhabi and Dubai, raising near-term downside risks for services and broader non-oil activity.

Non-oil growth in the Gulf had been robust in recent years, with JPMorgan estimating a 4.3% expansion in 2025 and a prior 2026 baseline of 3.5%. However, following the latest escalation, "non-oil activity faces meaningful downside risks from potentially protracted business disruptions and lower business and consumer confidence," the strategist said. By country, JPMorgan cut its non-oil growth forecast for Bahrain by 0.5 percentage points, the United Arab Emirates by 0.4 points, Qatar by 0.3 points, and both Saudi Arabia and Kuwait by 0.2 points, while Oman was left unchanged.