Assessing Regional Market Resilience in 2026

Threats are slanted to the downside. In the occasion of an extended conflict, the present impacts on the area will be compoundedthrough raised energy and food rates, decreasing trade, tourism and remittances, increased fiscal pressures, and displacement. "The existing crisis is a stark tip of the work ahead for the area: not just to weather shocks, but to restore more resistant economies with more powerful macroeconomic fundamentals, innovate and enhance governance, purchase infrastructure, and increase employment-creating sectors," stated.

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

ANSR July GCC PRs 50DR+

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 results have been mixed. The report highlights the crucial need for strong institutions and mindful targeting of policies. "As countries deal with the heavy toll of the present dispute, it is essential to likewise not lose sight of the work required for long-lasting peace and prosperity," said.

Optimizing Capital Strategies for a 2026 Economy

Q2 2026: The ICAEW Economic Update Middle East, is a quarterly economic projection for the area prepared straight for the financing profession. The GCC economy deals with a marked contraction this year pending information of the US-Iran arrangement to end the war. We expect energy circulations, tourism and financier belief to gradually normalise as war disruptions go away.

ANSR July GCC PRs 50DR+

The interim arrangement in between the US and Iran is a substantial action towards reaching a full-blown deal. A full return to normality in the Strait of Hormuz will likely require time, but the danger of a recession-inducing oil cost spike has decreased. Worldwide GDP is expected to grow by 2.4% this year, 0.2 ppt less than we forecasted 3 months earlier, 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), higher than the decrease in the very first year of the Covid pandemic. Kuwait, Iran, Iraq and Qatar stick out as the hardest hit, owing to their inability to prevent the disturbance to local shipping, war-driven infrastructure damage and tourism losses.

Our 2026 outlook for the GCC is weaker than 3 months earlier, with GDP projection to agreement by 2.4% compared to a 0.2% decrease predicted formerly. We expect Oman and Saudi Arabia to be the least adversely 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 considerable. Saudi GDP data for Q1 showed growth slowed to 3% y/y, with non-oil activities broadening by 2.9%, the weakest speed because 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 disruption hit late in the quarter.

Middle East Stock Market Trends in 2026

Aside from Oman, all GCC manufacturers along with Iran and Iraq have suffered comprehensive oil and gas production losses considering that the start of the conflict. Might information show 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 assisted avoid an even larger plunge in output.

ANSR July GCC PRs 50DR+

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 largely by normalisation from a severely depressed base. Oil rates have actually been unstable, reducing below $85 per barrel as the interim agreement was revealed.

In the medium term, we expect oil rates to be slightly lower than our pre-war standard, as the UAE's departure from OPEC+ enables a progressive boost in its output towards the 5mn barrel per day production target once trade normalises. Against this background, the UAE will accelerate the building of a new West-East pipeline that need to double the capability of export through Fujairah.

The May PMI studies reported output growth reaching its strongest level in 3 months, driven mainly by improved domestic demand. However, they stay below long-run averages, with weak export orders and cost pressures from higher product and transport expenses are a typical 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 gradual recovery over the remainder of the decade.