Whether they want it or not, the Gulf states now play a vital and pervasive role as investors across the Middle East. As the Gulf states themselves are dominant in investment vehicles — rather than private outflows — foreign policy and economic interests are bound to collide.

Intra-Gulf conflicts affect investment flows within the region. Their fiscal vulnerabilities and pro-cyclical domestic economic growth tied to oil prices will continue to affect their ability to create growth abroad. And their political interests will create priorities abroad for both foreign investment flows as well as aid and financial intervention in the form of central bank deposits. With the coronavirus pandemic, political collapse in places like Yemen and Lebanon, and weak domestic demand at home, there is good reason to fear a lapse in investment outflows and remittance flows from the Gulf to the wider Middle East.

There is a growing consensus among economists and those who study emerging markets that we are facing a major economic recession in which poorer countries will be ill-equipped for recovery. The World Bank has revised its April projection to now expect that, as a baseline, more than 70 million people will be pushed into extreme poverty (measured as living on $1.90 per day) to a downside projection of up to 100 million people moving into extreme poverty as a result of a coronavirus-induced global recession. In a new article for Foreign Affairs, economists Carmen Reinhart and Vincent Reinhart predict a disproportionate burden on developing economies from lost investment, accelerating debt crises and a lack of fiscal capacity to support stimulus measures to already weak private sectors with already difficult tasks to create jobs for their young populations.

In the case of Egypt, we find a bellwether of sorts in the region. Despite its challenges, Egypt is a consistent destination for foreign investment within the Middle East. Its large consumer market, its appetite for mega-contracting projects in real estate and infrastructure, its active local equity exchange, the Egyptian Exchange, and its strategic location have made it a traditional hub for regional investment flows. If things are bad in Egypt, you can expect them to be worse elsewhere across Middle East markets.