GCC Weekly

Research evidence excerpt

GCC Weekly

so incorporated other assumption Figure 1: Saudi Arabia's merchandise trade balance

changes and took account of recent data releases. While a US$bn Exports

normalization in conditions will allow for a clearer assess- 40

ment across GCC countries, the risk of further forecast revi- 35

sions remains high given oil price dynamics and the challenge 30

of modelling the disruption period while we await the release 25

of actual data. 20

Imports

We downgraded the GCC aggregate current account balance 10

by 1.6% of GDP and the fiscal balance by 1.9% of GDP. Nor- 5 Balance

mally, current account sensitivity to oil price changes would 0

be higher; however, we incorporated new high-frequency data 16 17 18 19 20 21 22 23 24 25 26

Source: GASTAT, J.P. Morgan

that affected several GCC countries—most notably Saudi

Arabia, where the current account forecast deteriorated by Figure 2: Saudi Arabia's trade

1.1% of GDP, while based on typical sensitivities, the implied

US$bn, both axis

widening would have been roughly twice as large. The benign 7 Oil (rhs) 35

downgrade was due to lower imports but also as we incorpo-

6 30

rate higher short-term oil price premium. For the rest of the

5 25

group, Kuwait and Oman saw the largest downgrades, reflect- Oil related

4 20ing higher sensitivities. Bahrain remains the country with the

most difficult macro picture as we now see fiscal deficit at 3 15

16.0% of GDP. 2 10

1 Others 5

On growth, we did not change our 2026 forecast (-2.2%), as 0 0

our prior assumption that the Strait of Hormuz would reopen 16 17 18 19 20 21 22 23 24 25 26

Source: GASTAT J.P. Morgan

in June proved correct. Nevertheless, we see upside risks

from oil production. Our current profile already assumes a

pick-up over the coming weeks and months; the additional