Foreign Capital Opportunities within the GCC

Risks are slanted to the downside. In case of an extended conflict, the existing influence on the area will be compoundedthrough raised energy and food rates, decreasing trade, tourism and remittances, increased fiscal pressures, and displacement. "The present crisis is a plain tip of the work ahead for the region: not just to weather shocks, however to reconstruct more resilient economies with more powerful macroeconomic basics, innovate and improve governance, buy facilities, and enhance employment-creating sectors," said.

With peace and the best action, countries can develop the organizations, abilities and competitive sectors that produce opportunities for people." With this long-term vision in mind, the report takes a close look at the region's capacity for industrial policy government actions to increase strategic business activity as a motorist of economic growth and task creation.

ANSR July GCC PRs 50DR+

Federal governments in the area have embraced industrial policy at a high rate in the last decade, frequently through sovereign wealth funds and state-owned business, however the outcomes have been mixed. The report highlights the critical requirement for strong organizations and careful targeting of policies. "As nations face the heavy toll of the present dispute, it is important to also not forget the work needed for lasting peace and success," said.

Key Stock Market Strategies for Regional Investors

Q2 2026: The ICAEW Economic Update Middle East, is a quarterly economic projection for the region prepared straight for the financing occupation. The GCC economy faces a marked contraction this year pending details of the US-Iran agreement to end the war. We anticipate energy flows, tourism and financier belief to gradually normalise as war disturbances go away.

ANSR July GCC PRs 50DR+

The interim arrangement in between the United States and Iran is a significant action towards reaching a full-blown offer. A complete go back to normality in the Strait of Hormuz will likely require time, however the threat of a recession-inducing oil price spike has actually declined. Worldwide GDP is expected to grow by 2.4% this year, 0.2 ppt less than we predicted 3 months ago, and 3.1% in 2027.

We anticipate a 4.1% contraction in Middle East GDP this year (versus forecasted 3.6% growth before the war), greater than the decline in the very first year of the Covid pandemic. Kuwait, Iran, Iraq and Qatar stick out as the hardest struck, owing to their inability to prevent the interruption to regional shipping, war-driven infrastructure damage and tourism losses.

Our 2026 outlook for the GCC is weaker than 3 months back, with GDP forecast to contract by 2.4% compared to a 0.2% decline projected previously. We anticipate Oman and Saudi Arabia to be the least negatively impacted by the fallout from the conflict, with both economies continuing to expand this year.

The financial damage incurred in the last couple of months is substantial. Saudi GDP information for Q1 revealed development slowed to 3% y/y, with non-oil activities expanding by 2.9%, the weakest speed given that the Covid pandemic. On a seasonally adjusted basis, GDP contracted 1.2% q/q, driven by a 6.8% fall in oil activities as the Strait of Hormuz disturbance hit late in the quarter.

Analyzing Regional Market Potential in 2026

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

ANSR July GCC PRs 50DR+

Nevertheless, we anticipate GCC oil sector output to agreement by 14.5% this year, which will mark the steepest decline in a number of years. We then expect a 23.5% rebound next year, driven largely by normalisation from a seriously depressed base. Oil costs have been unpredictable, reducing listed below $85 per barrel as the interim arrangement was announced.

In the medium term, we expect oil rates to be somewhat lower than our pre-war standard, as the UAE's departure from OPEC+ permits a steady boost in its output towards the 5mn barrel daily production target once trade normalises. Against this background, the UAE will speed up the construction of a brand-new West-East pipeline that need to double the capacity of export through Fujairah.

The May PMI surveys reported output development reaching its greatest level in 3 months, driven largely by improved domestic need. Nevertheless, they stay below long-run averages, with weak export orders and price pressures from greater product and transportation expenses are a common theme. In general, we anticipate a 1.1% contraction in GCC non-energy sectors this year (compared to 4.2% development pre-war) and a steady recovery over the remainder of the years.