Dubai, United Arab Emirates: The US-Iran war will cost Gulf countries more than $200 billion in damage and economic losses could reach nearly four times that amount by 2030, insurer Allianz Trade said on Wednesday.
Gulf countries bore the brunt of Tehran's wrath after the United States and Israel launched attacks on Iran on February 28, triggering the war.
In retaliation, Iran restricted shipping in the key strait of Hormuz and struck civilian infrastructure including airports, seaports, energy facilities, landmarks and American assets in the US-allied countries.
"Physical damage across the region is assessed just above $200bn, mostly concentrated in Hormuz-locked economies, especially in energy infrastructure," the insurer said in a report.
More than 80 energy facilities were hit in the war, mostly in Kuwait, Qatar and Bahrain, the report said, with a third of them "severely damaged".
Beyond physical damage to energy infrastructure, the war has affected other sectors like tourism and real estate, which will see slower growth over the years.
"The total cost of the war for the GCC is set to reach $790bn, a cumulative gap of 5.9 percent of GDP relative to the pre-war trend through 2030," the report said.
"This reflects the cumulative loss of economic output over 2026-30, the difference between what the region was forecast to produce on its pre war-growth trend and what it is now projected to produce post-war," it said.
To make up for the losses, Gulf states are expected to reallocate sovereign wealth fund capital to domestic projects.
External surplus is expected to be halved but will be "partially offset with increased repatriation of sovereign wealth fund capital... of around $120bn of extra domestic investment through 2030 to the detriment of international investment," the report said.
"The war accelerates the need to spend more domestically as government priorities have shifted away from mega-projects towards resilience - and security-related ones," it added.
Gulf states are expected to raise their domestic infrastructure and defence spending to $380-400bn through 2030, the report said, providing "an opportunity of around $160bn for private and foreign investors".
Despite war and restricted access to Hormuz and the Bab al-Mandab strait, Saudi oil giant Aramco announced a 34.6 percent surge in third-quarter net profit last week, as Iran's restrictions in the Strait of Hormuz drives oil prices up.
The IMF expects Saudi Arabia, one of the world's biggest oil producers, to end the year with a 3.3 percent contraction in GDP, five percentage points lower than its previous forecast in July.
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