THIS MORNING: BMI pencils in a 3.3% contraction for MENA in 2026

Good morning, wonderful people. The summer lull and the Iran conflict are taking a heavy toll on business in the region, with the news cycle grinding to a near halt as the “will-they-won’t-they” drama between Washington and Tehran unfolds.

We’re continuing the week with yet another issue led by a macroeconomic theme — this time it’s Moody’s view on the expected geopolitical shocks facing the Kingdom’s economy. Next, we examine the pivot in the Saudi league’s spending strategy as competition heats up.

BMI sees turbulence ahead

Fitch’s BMI is expecting the MENA economy to see a 3.3% contraction this year, downgrading its earlier forecast of 0.9%, Arab News reports. Hormuz remaining closed could stall the recovery in oil production and weigh on trade, investment, and service activities, BMI said.

Saudi Arabia remains somewhat insulated: The Kingdom could face a 1.3% contraction, better than forecasts in the double-digits for Qatar (12.4%), Iraq (19.4%), and Kuwait (20.6%). It’s still trailing the UAE at 0.3% growth, and Oman at 2.9%, the only GCC country expected to see meaningful growth in 2026.

Data point

SAR 72.3 bn — that was the total value of real estate transactions in 2Q, according to REGA’s official figures. The quarter saw 53.7k transactions, with residential land being the most active property type.

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The big story abroad

A few geopolitical fronts are leading the news cycle. Regional tensions flared after renewed Israeli strikes on Gaza and Lebanon killed 11 people, including, according to the IDF, senior Hezbollah commander Abu Hassan Alaa. Meanwhile, US envoys met with Egyptian, Turkish, and Qatari mediators in Cairo to discuss advancing Washington’s peace plan for Gaza.

Trump snubs Seoul in favor of Pyongyang? US President Donald Trump has instructed the Pentagon to “substantially reduce” an upcoming joint military exercise with South Korea on the basis that it would send a “hostile” message to North Korea. Trump also said Seoul had declined to help in the “denuclearization” of Iran.

Over in the business press: Financial infrastructure platform Stripe has signed up to buy OpenRouter — a unified API and marketplace — for over USD 7 bn, indicating a demand for the startup’s services that help firms switch between AI models. The final value of the acquisition could change, sources told Bloomberg.