It followed hot on the heels of a five-day visit to China and Hong Kong at the end of June, which also sought to reinforce existing ties. China is Bahrain’s third-largest trading partner, with bilateral trade reaching $2.43 billion in 2025. 

As the smallest of the Gulf states, with a nominal GDP of $48.85 billion and the highest debt burden, Bahrain has arguably never had a more pressing need to maintain economic momentum and find new avenues for growth.  

With the U.K.-GCC free trade agreement (FTA) concluded in May, the EDB is eager to capitalize on the opportunities it may unlock; the U.K’.s trade with the GCC currently totals £53 billion ($71 billion) and could increase by 19.8% annually as a result of the agreement.  

H.E. Noor highlighted manufacturing, energy, life sciences, and the healthcare sector as key targets: “You will hopefully see a very clear plan starting to emerge once the FTA is officially signed, but we’re laying the groundwork now to make sure that we’re ready for it.”  

Back home, the kingdom is also betting on AI and cloud computing. Both Amazon Web Services (AWS) and Oracle are looking to expand their presence, and discussions are underway about growing Bahrain into a regional data-hosting hub. 

H.E. Noor noted that the drone attacks that disrupted the UAE and Bahrain’s AWS data centres earlier this year have moved the conversation beyond digital sovereignty and towards digital resilience.  

While H.E. Noor maintained that the EDB “has not seen much disruption” regarding existing and planned investments into the kingdom, she conceded that sectors such as manufacturing, logistics, and tourism have felt the impact of the war.  

She also didn’t shy away from acknowledging the recent sharp fall in Bahrain’s foreign exchange reserves, which dropped 56% to $1.5 billion at the end of May. This is their lowest level since the Covid crisis.  

“You saw the news, they did dip,” she said, adding that the kingdom has not tapped the $5.4 billion currency swap line extended to it by the UAE in April. 

“The Emiratis wanted to support us, not because of an immediate need, but as an added assurance for the local market, the banks, and potential investors. It’s a good buffer to have.”  

Bahrain is the only GCC state not to be rated investment grade by the three major credit rating agencies due to its high public debt and large fiscal deficits. 

Given both the economic and geopolitical challenges at home, Gulf states know that shoring up investor confidence is critical to their future development and recovery plans.   

Renewed Iranian attacks on multiple GCC states, including Bahrain, over the past week have underscored the obstacles that may lie ahead. 

You can read my full interview with H.E. Noor here.

Melissa Hancock
melissa.hancock@fortune.com

Get in touch: Reply to this email with feedback or contact me directly at the address above.

MENA economies to shrink 0.5% in 2026, IMF says

The IMF now expects the MENA economies to contract by 0.5% in 2026, as the impacts of the ongoing Iran war weigh heavily on energy-exporting countries. 

The latest prediction, which represented a sharp reduction from the April forecast of 1.1% growth, marks the region’s second downgrade in three months, and the largest downward revision of any region in the IMF's latest World Economic Outlook published last Tuesday. 

The IMF said Iraq, Kuwait and Qatar—the three producers most impacted by the blockade on the Strait of Hormuz—are expected to experience sharp economic contractions this year, before rebounding with “double-digit expansions” next year, assuming exports normalize.  

Saudi Arabia’s growth forecast has also been cut by 1.4% since April. However, its more diversified export routes mean the IMF expects the Saudi economy to grow by 1.7% in 2026 and to 5.5% next year. 

The IMF's latest projections do not include the UAE. 

“The contraction we are projecting for this year, as well as the downward revisions relative to April, reflect longer disruptions in oil, gas and refining production, as well as non-oil activity such as logistics, transport and tourism,” said Denise Egan, head of research at the IMF. 

Despite the weaker outlook for 2026, the IMF expects a stronger rebound in 2027, assuming the Strait gradually reopens and energy exports recover; it forecasts Mena economic growth to climb to 6.5% in 2027, up 1.9% from its April forecast. 

However, a renewed wave of strikes over the past week could upend that outlook. 

Traffic in the Strait of Hormuz has slowed to a two-month low, raising fresh questions about the ceasefire's fragility and the Gulf’s prospects for recovery.  

On Monday, Donald Trump said that Washington is reinstating a naval blockade of Iranian ports and will charge a 20% fee on all cargo shipped through the Strait of Hormuz.  

UAE scores major AI boost as U.S. eases chip export rules

The U.S. is significantly relaxing export restrictions on the UAE, making it much easier for approved UAE organizations to buy cutting-edge AI chips from companies such as Nvidia and AMD. The deal is seen as a major win for the Gulf state's bid to become a regional tech hub. 

UAE AI companies G42 and Core42, as well as U.S. companies and their subsidiaries operating in the country, including Amazon, Apple, and xAI, are among those that are no longer required to obtain licenses for AI chips and servers. 

The loosened export controls, announced last Friday, also ease U.S. restrictions on exporting military equipment, commercial satellites, and spacecraft to the UAE. 

The Commerce Department said the improved export access for the UAE reflects decades of U.S. cooperation with the country on regional security efforts, including countering Iran and aligned groups, such as Hamas, Hezbollah, and the Houthis. 

"More recently, the UAE played a key role advancing U.S. interests during Operation Epic Fury," the Department said, referring to the U.S.-Israeli strikes on Iran that began in February. 

Additionally, it noted that the UAE was the largest U.S. trading partner in the Middle East—its foreign direct investment in the United States was valued at over $1 trillion. 

Tesla and Esyasoft team up for 15 GWh battery storage

Tesla has partnered with Esyasoft, a subsidiary of Abu Dhabi investment behemoth International Holding Company (IHC), to roll out one of the largest planned global battery storage projects across several high-growth energy markets.  

At 15 Gigawatt-hours (GWh), the project currently ranks as the world’s third-largest planned battery energy storage system.  

The two companies will jointly develop, deploy and operate the initial storage portfolio across key markets including the GCC, the U.K., Western Europe, and India, while also supporting lifecycle management.  

As the Gulf scales its AI capabilities, advanced manufacturing facilities, and hyperscale data centre infrastructure, battery energy storage is emerging as a critical enabler of reliable, flexible, and resilient power systems. 

Tesla has been steadily expanding its utility-scale battery storage footprint in the GCC. 

Earlier this month, Saudi Arabia prequalified Tesla to bid on six utility-scale battery projects, each with 2 GWh of capacity, that will form part of the kingdom's National Renewable Energy Program. 

Esyasoft, meanwhile, operates across more than 12 countries and serves over 200 million consumers worldwide, supporting national-scale infrastructure programs through a combination of smart utilities, AI-driven analytics, e-mobility and battery energy storage systems. 

In January this year, it became the third company in the UAE to achieve unicorn status, surpassing a $1 billion valuation. 

The UAE is targeting a threefold increase in renewable energy capacity by 2030 under its updated UAE Energy Strategy 2050, while Saudi Arabia is accelerating renewable energy deployment in line with its Vision 2030 ambitions. 

The Big Number

The 3 things we enjoyed reading this week

• Sheikh Hamad bin Khalifa Al Thani, who passed away aged 74 on Sunday, transformed Qatar from a small Gulf state into one of the world’s richest countries by turning its natural gas reserves into a global LNG powerhouse. During his 1995-2013 rule, he presided over massive investments in infrastructure, education, and global assets. He founded the news channel Al Jazeera and laid the foundations for Qatar to host the 2022 FIFA World Cup, which helped put the country firmly on the global stage. 
• Apple’s 41-page lawsuit against OpenAI for stealing trade secrets reads like a corporate spy thriller, involving stolen laptops, data breaches, secret moles, and recruiting-as-espionage. OpenAI has pushed back, denying the claims, but the lawsuit could be a major test of how far AI companies can go in hiring top talent from tech rivals, as my Fortune colleague notes in this colorful piece. 
• SK Hynix raised $26.5 billion in its Nasdaq debut last week—the second-largest U.S. share sale ever—marking its transformation from a struggling memory-chip maker into one of the biggest beneficiaries of the AI boom. But despite surging profits, the company faces growing questions over whether AI infrastructure spending can continue at its current pace or if the sector is nearing a peak.