OPINION: How will war in the Middle East affect the watch industry?

The headlines are bleak. 

It was only a matter of time that the current conflict in the Middle East would touch us here in the West — and with inflation, oil and gas prices all on the rise, there’s no doubt that its ramifications are going to last for years. 

But what is the potential effect on the watch industry? It’s far from immune from global economic shocks, as the US tariffs saga showed in 2025. 

First up, the oil crisis caused by the conflict with Iran could lead to increased inflation — in the UK, the Bank of England just warned about this real possibility. And, as the cost of living increases (yet again) and energy and fuel prices go up, customers will inevitably cut back on non-essential goods like watches. 

The Swiss franc is also currently trading at near historic highs, pushed ever-upwards by global volatility. It’s often described as a ‘safe haven’ for investors and resilient to global shocks. But a strong Swiss franc means that Swiss-made watches often become more expensive abroad, putting them even more out of reach of regular buyers. Interrupted shipping routes, and difficulty sourcing raw materials could also push watchmaking prices up. 

And that’s not to mention the Dubai effect. The UAE city is the byword for luxury retail in the Middle East, and is known for both its tax-free shopping and competitive pricing. Prior to the Iran conflict, its watch industry was estimated to grow from US$ 410.05 million in 2024 to US$ 596.21 million in 2033. It even has its own international event, Dubai Watch Week, every other November. Last year, Bulgari, Hublot, and Louis Vuitton all released new models there, and there were talks from significant CEOs like Jean Frédéric Dufour of Rolex, Ilaria Resta of Audemars Piguet, and Karl-Freidrich Scheufele of Chopard. 

In short, Dubai is key to the international watch industry, with the Middle East more widely accounting for roughly ⁠5–6% of global luxury sales, with most purchases driven by tourists ​from Russia, Saudi Arabia, China, and India. And now flights are being suspended, expats are fleeing, and the city’s property and gold markets are at risk. Time will tell whether Dubai’s retail scene will be able to return to its previous strength once the conflict dies down.

Of course, with Dubai out of action, retailers in destinations like Paris, London, and New York could see an uptick in footfall and sales — as long as buyers’ flights aren’t routed through Dubai, that is. 

But it’s not all doom and gloom for the watch market. In an economic crunch, buyers either trade down or trade up. This means that wealthy shoppers, less affected by economic downturns, will be looking to invest in portable assets, like watches. With that in mind, we may see even more of a demand for brands that are viewed as investment opportunities, like Patek Philippe, Rolex, and Audemars Piguet.

Entry-level brands with reputations for value and reliability, and that have strong global distribution networks, like Seiko and Casio, could also continue to do well with price-sensitive customers as the conflict rolls on.