The trend: War in the Middle East is threatening the luxury industry’s fragile recovery.

• Retaliatory attacks by Iran on Dubai, Abu Dhabi, Bahrain, and Kuwait have forced Kering, Richemont, and other brands to temporarily close stores in the region.
• The indefinite length of the conflict is likely to restrain inbound and outbound tourism, hurting luxury sales locally and in international markets.

Why it matters: The Middle East was “luxury’s brightest performer in 2025,” growing 4% to 6% in 2025, according to Bain. While the region accounts for a small proportion of overall sales—between 5% and 10%, per RBC analyst Piral Dadhania—its consistent growth has made it a priority market for luxury brands looking to offset uncertain demand in the US and China.

The war threatens to upend that momentum.

• In the immediate term, the conflict is severely disrupting sales during Ramadan, a peak shopping season in the region.
• Tourism to hotspots like Abu Dhabi and Dubai—which is a key driver of luxury sales in the region—is likely to suffer as the war stalls inbound travel, while outbound disruption could hurt sales in Europe, a popular destination for Middle East travelers.

The implications: Disruption in the Middle East is likely to weigh heavily on global luxury growth this year. While our forecast currently expects growth to accelerate to 5.5% in 2026, geopolitical uncertainty could easily drag that number down—especially if the conflict drags on for an extended period of time. Not only will a drawn-out war affect sales in the region, it—and rising oil prices—are likely to hurt consumer sentiment and buying power around the world, making discretionary purchases like luxury less justifiable.