Global Capital Prospects within the Middle East

Risks are tilted to the drawback. In the event of an extended dispute, the existing effect on the area will be compoundedthrough raised energy and food prices, declining trade, tourist and remittances, increased financial pressures, and displacement. "The existing crisis is a plain tip of the work ahead for the area: not just to weather shocks, but to rebuild more resistant economies with stronger macroeconomic fundamentals, innovate and enhance governance, buy facilities, and increase employment-creating sectors," stated.

With peace and the right action, nations can develop the organizations, abilities and competitive sectors that develop opportunities for people." With this long-term vision in mind, the report takes a close take a look at the region's potential for commercial policy federal government actions to increase tactical service activity as a chauffeur of economic growth and task creation.

ANSR July GCC PRs 50DR+

Federal governments in the region have actually embraced industrial policy at a high rate in the last years, typically through sovereign wealth funds and state-owned business, however the outcomes have actually been mixed. The report highlights the critical need for strong institutions and careful targeting of policies. "As nations face the heavy toll of today conflict, it is necessary to likewise not lose sight of the work required for long-lasting peace and success," stated.

Middle East Equity Trading Patterns for 2026

Q2 2026: The ICAEW Economic Update Middle East, is a quarterly economic projection for the area prepared directly for the financing profession. The GCC economy faces a significant contraction this year pending information of the US-Iran contract to end the war. We anticipate energy flows, tourist and financier sentiment to slowly normalise as war interruptions diminish.

ANSR July GCC PRs 50DR+

The interim contract in between the US and Iran is a substantial step towards reaching a full-blown offer. A complete return to normality in the Strait of Hormuz will likely require time, however the risk of a recession-inducing oil price spike has actually decreased. Worldwide GDP is expected to grow by 2.4% this year, 0.2 ppt less than we projected 3 months back, and 3.1% in 2027.

We anticipate a 4.1% contraction in Middle East GDP this year (versus predicted 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 failure to avoid the disturbance to regional shipping, war-driven facilities damage and tourist losses.

Our 2026 outlook for the GCC is weaker than three months earlier, with GDP projection to contract by 2.4% compared to a 0.2% decline projected formerly. We expect 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 economic damage incurred in the last few months is significant. Saudi GDP information for Q1 showed growth slowed to 3% y/y, with non-oil activities expanding 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 interruption hit late in the quarter.

Strategic Capital Expansion for the Future

Aside from Oman, all GCC manufacturers in addition to Iran and Iraq have suffered substantial oil and gas production losses because the start of the dispute. Might information reveal regional production almost cut in half from pre-war levels, with the decrease 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 prevent an even larger plunge in output.

ANSR July GCC PRs 50DR+

We forecast GCC oil sector output to agreement by 14.5% this year, which will mark the steepest decline in several decades. We then expect a 23.5% rebound next year, driven mostly by normalisation from a badly depressed base. Oil prices have been unpredictable, alleviating listed below $85 per barrel as the interim arrangement was announced.

In the medium term, we anticipate oil prices to be somewhat lower than our pre-war standard, as the UAE's departure from OPEC+ permits a steady increase in its output towards the 5mn barrel each day production target once trade normalises. Against this background, the UAE will speed up the building and construction of a new West-East pipeline that ought to double the capability of export through Fujairah.

The May PMI surveys reported output growth reaching its strongest level in 3 months, driven mainly by improved domestic need. Nevertheless, they stay listed below long-run averages, with weak export orders and cost pressures from greater product and transport expenses are a typical style. Overall, we expect a 1.1% contraction in GCC non-energy sectors this year (compared to 4.2% growth pre-war) and a steady healing over the rest of the decade.