US government shutdown to force trillions of dollars out, into GCC and emerging markets?

Dubai: The global financial system thrives on predictability. For decades, the U.S. dollar has been the world’s ultimate anchor, absorbing shocks, setting benchmarks, and dominating global trade. But Washington’s latest government shutdown has turned that assumption upside down.

What was once dismissed as temporary gridlock is now perceived as a deeper structural dysfunction, raising doubts over America’s ability to manage its own finances. Shutdowns often pass without major financial disruption, but in today’s context, the timing renders this one far more disruptive.

Shutdown consequences

There is no doubt the consequences are immediate and far-reaching. The shutdown is costing the U.S. economy around $7 billion each week, reducing Q4 GDP by 0.1 percentage points.

More damaging, however, is the paralysis of institutions, including layoffs in unfunded programs, a freeze in the release of key data on jobs and inflation, and the suspension of services ranging from mortgage processing to small business loans.

Global consequences

The shutdown is also deepening global worries about America’s institutional credibility, fiscal stability, and mounting dysfunction, said Luke Bartholomew, deputy chief economist at Aberdeen, a UK-based wealth and investment group. He noted that the Trump administration appears unusually willing to expend political capital on reshaping and influencing the Federal Reserve, an institution he described as the cornerstone of global capital markets. That pressure, he warned, is weighing on long-term yields and could persist for some time.

The most immediate consequence for markets could be renewed downward pressure on the dollar or a shift in the Federal Reserve’s October rate decision, according to Joe Brusuelas, chief economist at RSM U.S, a provider of assurance, tax and consulting services. He explained that government shutdowns typically spark a brief wave of speculative trading in rates and currencies, and this episode is no exception.

However, Brusuelas cautioned that if the standoff drags on toward the length of the record 2018–2019 shutdown (35 days), the risks would escalate. An extended closure, he noted, could influence the Fed’s policy decision later this month, with ripple effects across capital flows, interest rates, and global currency markets.

Why GCC could be winning

The U.S. economy is effectively flying blind, while the world is losing confidence in the dollar’s role as a safe haven. Some analysts warn the dollar could accelerate toward a historic 15% freefall. And unlike past crises, where global investors rushed into the dollar, this time capital is rushing out, toward other emerging markets that project competence and clarity, and the GCC is no bet a winner.

 Collectively, GCC sovereign wealth funds manage more than $4 trillion in assets, providing unmatched liquidity buffers. Sailing beyond being energy exporters, Gulf states are now magnets for global capital, thanks to ambitious diversification agendas and disciplined fiscal strategies. Saudi Arabia has become one of the leading recipients of capital flows from the U.S. and beyond, driven by its Vision 2030 strategy.

In the first half of 2025, U.S. companies accounted for 61 greenfield FDI projects in Saudi Arabia, totaling about $2.7 billion, almost 30% of all such projects and capital inflows during that period. Major sectors include renewables, advanced manufacturing, logistics, and technology, all aligned with Vision 2030’s priorities. Riyadh’s giga-projects, spanning tourism to clean energy, present large-scale opportunities at a time when investors seek stability paired with growth potential.

The UAE is also cementing its status as a global financial hub. Dubai’s financial services sector is absorbing wealth reallocated from U.S. equities, while Abu Dhabi is emerging as a center for green hydrogen, renewables, and fintech innovation. FDI inflows surged in recent years, reflecting investor appetite for clean energy, logistics, and advanced manufacturing. Meanwhile, Qatar is leveraging its LNG leadership and strategic logistics investments to attract capital. Beyond energy, Doha is positioning itself as a hub for supply chain resilience and international trade flows, attracting global investors seeking to diversify from the U.S.-centric risks.

Multipolar monetary order

The dollar’s decline is not a reaction to the current shutdown. It reflects deeper structural weaknesses such as soaring debt, recurring fiscal standoffs, and political paralysis. Historically, crises drove investors into the dollar; today, the U.S. itself is the source of crisis. That inversion signals the dawn of a multipolar financial order, where the dollar is just one option among several, not the default.

During the Saudi-U.S. Investment Forum, officials emphasized that Gulf states are positioning themselves as anchors of global finance, no longer confined to hydrocarbons but shaping the world’s capital flows across industries. Sovereign wealth funds are not only absorbing capital, they are redeploying it strategically into global markets, creating feedback loops of influence. What is unfolding is not a temporary shift but a historic rebalancing. Trillions are moving away from the U.S. toward economies that combine liquidity, vision, and policy clarity. Capital seeks competence, not chaos. And right now, competence resides in Riyadh, Dubai, and Doha.

- The writer is multi-award-winning trader and Managing Partner of Mintiply Capital