The Central Bank of the UAE (CBUAE) announced sweeping measures for the UAE banking sector yesterday, as the Iran war enters its 19th day today.
The CBUAE emphasised that all measures are ‘resilience’ measures.
Measures Unpacked
Banks will gain greater access to reserve balances of up to 30% of the cash reserve requirement and access to term liquidity facilities across UAE dirhams and U.S. dollars, according to the CBUAE.
Other measures include temporary relief in liquidity and stable funding ratios in addition to the temporary release of the countercyclical capital buffer and capital conservation buffer.
S&P and Goldman Issue Warnings
Gulf banks could face domestic deposit outflows of $307B if the Middle East conflict deepens, S&P Global Ratings said in a report on Monday.
Goldman Sachs economist Farouk Soussa also issued a stark warning of growth contractions across the GCC if the war goes into April, first reported by a research note seen by EnterpriseAM.
Goldman is reportedly forecasting that every GCC economy will shrink in FY26, between 2-5%.
If the conflict becomes protracted, with the Strait blocked until the end of April, Qatar and Kuwait could contract by 14%.
Diversification & Physical Geography
Kuwait is the least diversified of all six GCC economies, and both economies are most constrained by export routes whereas KSA and the UAE can export via alternative inland and maritime routes.
KSA is diverting oil exports overland to the Red Sea port of Yanbu whilst the UAE has access to the Gulf of Oman via Fujairah and overland routes to Sohar, Oman.
FY27 Rebound
Yet any recession will be quickly offset by the GCC’s strong fundamentals, logistics and UHNWI wealth creation being two core growth drivers.
The GCC remains the world’s largest transit hub by cargo volume and daily passenger movement, whilst also supporting European, Asian, and GCC family offices.
In early 2026, DXB overtook Atlanta by seat capacity, while regional airports in Dubai and Doha together handle over 4.8M tonnes of air freight, with massive expansion planned at Dubai World Central to handle up to 260M passengers annually.
Growth is forecast to bounce back across all GCC economies although some economies will face net losses of growth irrespective of the rebound in FY27.
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