According to Jihad Azour, the director of the IMF’s Middle East and Central Asia department, the UAE and the broader Gulf region have officially transitioned into a “normalization” phase following the initial shock of the recent conflict. While the first phase involved immediate crisis management—a task for which regional governments were well-prepared thanks to lessons learned from the 2020 pandemic—the current focus is on navigating a landscape still heavily influenced by supply chain disruptions, particularly in the Strait of Hormuz. Despite these challenges, the UAE continues to maintain the strongest business sentiment within the GCC, holding well above the global average.

However, the outlook remains clouded by significant volatility, forcing the IMF to pivot from its baseline recovery projections toward more cautious, adverse scenarios. With energy prices lingering at double their early-year levels and geopolitical uncertainty remaining high, analysts are struggling to predict a clear path forward. The IMF now expects that the recovery process will take longer than initially anticipated, as the ongoing tension threatens to keep oil prices elevated well beyond original expectations.