How the Israel-Hamas war is impacting Middle East economies, from energy to arm sales

November 2023 Al-Monitor Trend Report 

2901 words

As billion-dollar deals took flight during the Dubai Airshow in November 2023, a noticeable absence hovered over proceedings: exhibition stands for Israeli weapons makers Israel Aerospace Industries and Rafael stood empty and unstaffed at the start of the weeklong expo, Reuters reported Nov. 13. 

Both companies have made significant UAE inroads since the emergence of the Abraham Accords, with their high-profile no-shows at the airshow underlining how the Gaza war has unsettled Arab-Israeli normalization and fledgling economic integration. Yet, dealmaking at the Dubai Airshow also offers a glimpse of how regional business and investment is soldiering on despite the threat of a wider war. 

Prior to the Oct. 7 attack, regional economies faced plenty of challenges, but there were also many reasons for optimism as years of turmoil gave way to an era of reconciliation and ambitious national development — headlined by Gulf states pouring billions into flashy economic diversification drives. Resurgent violence has upended that narrative, while an escalating conflict would wreak economic devastation regionally (alongside producing an oil price spike). Still, this comes as the Economist Intelligence Unit forecast on Nov 15. that the Israel-Hamas conflict will remain a contained confrontation, and that Middle Eastern economic growth will rise roughly 3% in 2024, compared to 1.8% in 2023.