Analyzing Regional Market Resilience for 2026

Risks are tilted to the disadvantage. In the event of an extended dispute, the present effects on the area will be compoundedthrough raised energy and food costs, declining trade, tourism and remittances, increased fiscal pressures, and displacement. "The current crisis is a plain reminder of the work ahead for the area: not just to weather shocks, however to restore more resistant economies with more powerful macroeconomic basics, innovate and improve governance, buy facilities, and increase employment-creating sectors," said.

With peace and the right action, nations can build the organizations, capabilities and competitive sectors that create opportunities for individuals." With this long-lasting vision in mind, the report takes a close take a look at the area's capacity for commercial policy federal government actions to increase strategic company activity as a chauffeur of financial development and task creation.

ANSR July GCC PRs 50DR+

Governments in the region have embraced commercial policy at a high rate in the last years, often through sovereign wealth funds and state-owned enterprises, however the outcomes have actually been mixed. The report highlights the critical need for strong organizations and cautious targeting of policies. "As nations deal with the heavy toll of today conflict, it is essential to also not lose sight of the work required for lasting peace and prosperity," said.

Top International Capital Prospects in the GCC Market

Q2 2026: The ICAEW Economic Update Middle East, is a quarterly economic forecast for the region prepared straight for the finance occupation. The GCC economy faces a significant contraction this year pending information of the US-Iran arrangement to end the war. We anticipate energy flows, tourist and financier sentiment to gradually normalise as war disturbances subside.

ANSR July GCC PRs 50DR+

The interim contract in between the US and Iran is a considerable action towards reaching a full-blown offer. A full go back to normality in the Strait of Hormuz will likely take some time, however the danger of a recession-inducing oil price spike has declined. International GDP is expected to grow by 2.4% this year, 0.2 ppt less than we predicted 3 months earlier, and 3.1% in 2027.

We forecast a 4.1% contraction in Middle East GDP this year (versus projected 3.6% growth before the war), higher than the decrease in the first year of the Covid pandemic. Kuwait, Iran, Iraq and Qatar stick out as the hardest struck, owing to their inability to prevent the disruption to local shipping, war-driven infrastructure damage and tourist losses.

Our 2026 outlook for the GCC is weaker than 3 months earlier, with GDP projection to agreement by 2.4% compared to a 0.2% decrease predicted previously. We expect Oman and Saudi Arabia to be the least negatively affected by the fallout from the conflict, with both economies continuing to expand this year.

The economic damage sustained in the last couple of months is substantial. Saudi GDP information for Q1 showed growth slowed to 3% y/y, with non-oil activities expanding by 2.9%, the weakest speed considering that the Covid pandemic. On a seasonally changed basis, GDP contracted 1.2% q/q, driven by a 6.8% fall in oil activities as the Strait of Hormuz disruption struck late in the quarter.

Middle East Stock Trading Trends for 2026

Aside from Oman, all GCC manufacturers in addition to Iran and Iraq have suffered comprehensive oil and gas production losses because the start of the conflict. Might information show local production almost cut in half from pre-war levels, with the decline deepening relative to March and April. Rerouting efforts, including by Saudi Arabia through the East-West Pipeline and the UAE through the Habshan-Fujairah pipeline, have assisted avoid an even bigger plunge in output.

ANSR July GCC PRs 50DR+

We forecast GCC oil sector output to contract by 14.5% this year, which will mark the steepest decline in a number of decades. We then expect a 23.5% rebound next year, driven mainly by normalisation from a significantly depressed base. Oil prices have actually been unstable, reducing listed below $85 per barrel as the interim agreement was revealed.

In the medium term, we anticipate oil costs to be a little lower than our pre-war baseline, as the UAE's departure from OPEC+ allows for a steady boost in its output towards the 5mn barrel per day production target once trade normalises. Versus this background, the UAE will speed up the building of a new West-East pipeline that ought to double the capacity of export through Fujairah.

The May PMI studies reported output growth reaching its strongest level in 3 months, driven mainly by enhanced domestic need. However, they stay below long-run averages, with weak export orders and price pressures from higher product and transport expenses are a typical theme. Overall, we expect a 1.1% contraction in GCC non-energy sectors this year (compared to 4.2% development pre-war) and a gradual healing over the rest of the years.