Coface: the global economy in the grip of inflation. Gulf countries downgraded

(Il Sole 24 Ore Radiocor) - Almost eight months after the outbreak of the war in the Middle East, the fears expressed at the start of summer 2026 have materialised: the worsening situation has exerted a growing pressure on commodity prices and financial conditions, and consequently on economic activity. Coface, one of the world’s leading providers of credit insurance and commercial risk management, has carried out 3 downgrades and 4 upgrades in terms of country risk, and made 20 changes to sector ratings (12 downgrades and 8 upgrades). This is according to the ‘Coface Risk Review’ for October 2026

“The protracted conflict in the Middle East is reigniting the risk of a new global inflationary shock,” says Jean-Christophe Caffet, chief economist at Coface. “Rising costs of energy, raw materials and transport are forcing central banks to maintain restrictive monetary policies, making the situation increasingly difficult for governments and the most vulnerable businesses.”

“Businesses, which have long been operating in a climate of uncertainty and higher costs, are now witnessing a rise in the cost of capital, which is affecting their ability to secure financing,” comments Ernesto De Martinis, CEO of Coface Mediterranean & Africa Region. “In an interconnected economy, where regional crises spread rapidly to global supply chains, risks are mounting and room for manoeuvre is shrinking. Our task is to help companies manage uncertainty and the impact of risks on liquidity and profitability, so that they can continue to grow their businesses even in complex situations such as the current one.”

In the Middle East, economic activity in the Gulf Cooperation Council countries is expected to contract in 2026. Saudi Arabia – which has moved from a fairly moderate risk (A3) to a moderate risk (A4) – is exposed to attacks on its energy infrastructure and most of its export routes, whilst the United Arab Emirates (from low risk A2 to fairly moderate A3) and Qatar (from A3 to A4) are vulnerable due to their dependence on the Strait of Hormuz.

The agri-food sector has been downgraded in six countries. In Europe (France, Austria and Poland), the decision is primarily linked to the extreme weather conditions recorded during the summer of 2026. In the United Arab Emirates and Saudi Arabia, vulnerability stems more from their heavy reliance on food imports than from domestic production issues. In Argentina, the sector continues to face a difficult financial climate, characterised by a number of agricultural business failures, high costs and lower profit margins.