Key International Capital Prospects in the GCC Market

Threats are tilted to the downside. In case of an extended dispute, the current influence on the region will be compoundedthrough raised energy and food costs, decreasing trade, tourist and remittances, increased fiscal pressures, and displacement. "The current crisis is a stark reminder of the work ahead for the region: not only to weather shocks, but to restore more resilient economies with stronger macroeconomic principles, innovate and enhance governance, purchase facilities, and enhance employment-creating sectors," said.

With peace and the best action, nations can build the institutions, capabilities and competitive sectors that produce chances 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 strategic company activity as a chauffeur of economic growth and job production.

ANSR July GCC PRs 50DR+

Federal governments in the area have actually embraced industrial policy at a high rate in the last years, often through sovereign wealth funds and state-owned enterprises, however the results have been mixed. The report highlights the crucial requirement for strong organizations and mindful targeting of policies. "As countries face the heavy toll of the present conflict, it is essential to also not lose sight of the work required for long-lasting peace and prosperity," stated.

Key International Investment Prospects in the GCC Region

Q2 2026: The ICAEW Economic Update Middle East, is a quarterly financial forecast for the region prepared directly for the financing occupation. The GCC economy deals with a marked contraction this year pending details of the US-Iran agreement to end the war. We expect energy flows, tourist and investor sentiment to gradually normalise as war disturbances go away.

ANSR July GCC PRs 50DR+

The interim contract in between the US and Iran is a significant action towards reaching a full-blown offer. A complete return to normality in the Strait of Hormuz will likely take time, however the danger 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 predicted 3 months back, and 3.1% in 2027.

We forecast a 4.1% contraction in Middle East GDP this year (versus forecasted 3.6% growth before the war), higher than the decrease in the very first year of the Covid pandemic. Kuwait, Iran, Iraq and Qatar stand apart as the hardest struck, owing to their inability to avoid the disturbance to local shipping, war-driven facilities damage and tourist losses.

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

The financial damage sustained in the last couple of months is significant. Saudi GDP data for Q1 showed development slowed to 3% y/y, with non-oil activities broadening by 2.9%, the weakest speed given 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 interruption hit late in the quarter.

Middle East Equity Trading Trends in 2026

Aside from Oman, all GCC manufacturers as well as Iran and Iraq have actually suffered comprehensive oil and gas production losses since the start of the dispute. Might information show regional 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 actually assisted avoid an even larger plunge in output.

ANSR July GCC PRs 50DR+

Nevertheless, we anticipate GCC oil sector output to contract by 14.5% this year, which will mark the steepest decrease in numerous years. We then anticipate a 23.5% rebound next year, driven mostly by normalisation from a significantly depressed base. Oil costs have been unpredictable, alleviating listed below $85 per barrel as the interim arrangement was revealed.

In the medium term, we anticipate oil prices to be a little 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 once trade normalises. Against this backdrop, the UAE will speed up the building of a new West-East pipeline that should double the capability of export through Fujairah.

The May PMI surveys reported output development reaching its strongest level in three months, driven mainly by improved domestic demand. They stay below long-run averages, with weak export orders and cost pressures from greater material and transportation costs are a typical theme. In general, we expect a 1.1% contraction in GCC non-energy sectors this year (compared to 4.2% development pre-war) and a progressive healing over the rest of the decade.