Global Investment Prospects within the GCC

Threats are slanted to the downside. In case of a prolonged conflict, the present effect on the area will be compoundedthrough raised energy and food costs, declining trade, tourism and remittances, increased fiscal pressures, and displacement. "The present crisis is a plain suggestion of the work ahead for the region: not just to weather shocks, but to rebuild more durable economies with stronger macroeconomic fundamentals, innovate and enhance governance, buy infrastructure, and improve employment-creating sectors," said.

With peace and the right action, countries can develop the institutions, abilities and competitive sectors that produce chances 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 government actions to increase strategic service activity as a chauffeur of financial growth and job production.

ANSR July GCC PRs 50DR+

Federal governments in the region have embraced industrial policy at a high rate in the last years, frequently through sovereign wealth funds and state-owned business, however the results have been mixed. The report highlights the important need for strong institutions and mindful targeting of policies. "As countries deal with the heavy toll of today dispute, it is necessary to also not lose sight of the work needed for lasting peace and prosperity," stated.

Securing Middle East Portfolios for 2026 Trends

Q2 2026: The ICAEW Economic Update Middle East, is a quarterly financial forecast for the area prepared directly for the financing profession. The GCC economy faces a marked contraction this year pending details of the US-Iran agreement to end the war. We expect energy flows, tourist and financier belief to gradually normalise as war disturbances subside.

ANSR July GCC PRs 50DR+

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

We anticipate a 4.1% contraction in Middle East GDP this year (versus projected 3.6% growth before the war), greater 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 failure to prevent the disruption to regional shipping, war-driven infrastructure 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 previously. 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 considerable. Saudi GDP data for Q1 revealed development slowed to 3% y/y, with non-oil activities broadening by 2.9%, the weakest speed since 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 disturbance hit late in the quarter.

Why Economic Diversification Can Shape GCC Markets

Aside from Oman, all GCC manufacturers along with Iran and Iraq have actually suffered substantial oil and gas production losses considering that the start of the conflict. Might information show local production almost halved from pre-war levels, with the decrease 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 assisted avoid an even bigger plunge in output.

ANSR July GCC PRs 50DR+

Nonetheless, we forecast GCC oil sector output to agreement by 14.5% this year, which will mark the steepest decrease in a number of years. We then expect a 23.5% rebound next year, driven mainly by normalisation from a severely depressed base. On the other hand, oil costs have actually been volatile, reducing below $85 per barrel as the interim agreement was announced.

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

The May PMI studies reported output development reaching its greatest level in three months, driven largely by improved domestic need. Nevertheless, they remain listed below long-run averages, with weak export orders and cost pressures from higher product and transportation costs are a common theme. In general, we expect a 1.1% contraction in GCC non-energy sectors this year (compared to 4.2% growth pre-war) and a progressive recovery over the rest of the decade.