Foreign Capital Prospects across the GCC

Dangers are slanted to the drawback. In the occasion of an extended dispute, the current influence on the region will be compoundedthrough elevated energy and food prices, declining trade, tourist and remittances, increased financial pressures, and displacement. "The present crisis is a plain reminder of the work ahead for the area: not only to weather shocks, but to rebuild more resilient economies with more powerful macroeconomic fundamentals, innovate and enhance governance, buy facilities, and improve employment-creating sectors," said.

With peace and the right action, nations can construct the institutions, capabilities and competitive sectors that develop chances for individuals." With this long-term vision in mind, the report takes a close look at the region's capacity for commercial policy government actions to increase tactical business activity as a motorist of economic growth and task development.

ANSR July GCC PRs 50DR+

Governments in the area have actually embraced industrial policy at a high rate in the last decade, typically through sovereign wealth funds and state-owned enterprises, however the outcomes have been mixed. The report highlights the crucial need for strong institutions and careful targeting of policies. "As countries face the heavy toll of the present conflict, it is very important to also not forget the work needed for lasting peace and success," said.

The Future Business Landscape of Arabia

Q2 2026: The ICAEW Economic Update Middle East, is a quarterly financial projection for the region prepared straight for the finance occupation. The GCC economy deals with a marked contraction this year pending details of the US-Iran agreement to end the war. We anticipate energy flows, tourist and investor belief to gradually normalise as war disruptions subside.

ANSR July GCC PRs 50DR+

The interim agreement between the United States and Iran is a considerable step towards reaching a full-blown deal. A full go back to normality in the Strait of Hormuz will likely take some time, however the risk of a recession-inducing oil rate spike has decreased. Global GDP is expected to grow by 2.4% this year, 0.2 ppt less than we projected three 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 decrease in the first year of the Covid pandemic. Kuwait, Iran, Iraq and Qatar stand out as the hardest hit, owing to their inability to avoid the disruption to local shipping, war-driven facilities damage and tourist losses.

Our 2026 outlook for the GCC is weaker than 3 months earlier, with GDP forecast to agreement by 2.4% compared to a 0.2% decline forecasted formerly. We expect Oman and Saudi Arabia to be the least adversely affected by the fallout from the dispute, with both economies continuing to broaden this year.

The financial damage sustained in the last couple of months is substantial. Saudi GDP data for Q1 revealed growth slowed to 3% y/y, with non-oil activities broadening by 2.9%, the weakest rate since 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 disruption struck late in the quarter.

Upcoming Middle Eastern Market Outlook

Aside from Oman, all GCC producers along with Iran and Iraq have suffered extensive oil and gas production losses given that the start of the conflict. May information reveal regional production almost 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 larger 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 numerous decades. We then anticipate a 23.5% rebound next year, driven largely by normalisation from a significantly depressed base. On the other hand, oil rates have been volatile, alleviating below $85 per barrel as the interim contract was announced.

In the medium term, we expect oil costs to be somewhat lower than our pre-war standard, as the UAE's departure from OPEC+ enables a progressive increase in its output towards the 5mn barrel daily production target when trade normalises. Against this backdrop, the UAE will accelerate the construction of a brand-new West-East pipeline that need to double the capability of export through Fujairah.

The May PMI surveys reported output development reaching its strongest level in 3 months, driven largely by enhanced domestic demand. They stay listed below long-run averages, with weak export orders and cost pressures from greater material and transport expenses are a common theme. Overall, we expect a 1.1% contraction in GCC non-energy sectors this year (compared to 4.2% growth pre-war) and a steady recovery over the rest of the decade.