Key Foreign Investment Prospects for the GCC Market

Risks are slanted to the drawback. In case of an extended dispute, the present effect on the area will be compoundedthrough raised energy and food rates, decreasing trade, tourism and remittances, increased fiscal pressures, and displacement. "The current crisis is a plain suggestion of the work ahead for the region: not just to weather shocks, but to rebuild more resistant economies with stronger macroeconomic fundamentals, innovate and enhance governance, purchase infrastructure, and increase employment-creating sectors," stated.

With peace and the ideal action, nations can build the institutions, capabilities and competitive sectors that produce chances for people." With this long-lasting vision in mind, the report takes a close take a look at the region's capacity for commercial policy federal government actions to increase strategic service activity as a chauffeur of economic development and job development.

ANSR July GCC PRs 50DR+

Governments in the region have actually embraced commercial policy at a high rate in the last years, typically through sovereign wealth funds and state-owned enterprises, but the results have actually been blended. The report highlights the crucial need for strong organizations and careful targeting of policies. "As nations face the heavy toll of today conflict, it is very important to also not forget the work required for lasting peace and success," said.

Critical Equity Market Strategies for Regional Growth

Q2 2026: The ICAEW Economic Update Middle East, is a quarterly financial forecast for the area prepared directly for the finance occupation. The GCC economy faces a marked contraction this year pending details of the US-Iran arrangement to end the war. We expect energy flows, tourism and financier belief to slowly normalise as war interruptions decrease.

ANSR July GCC PRs 50DR+

The interim agreement in between the US and Iran is a substantial action towards reaching a full-blown deal. A full go back to normality in the Strait of Hormuz will likely take time, but the threat of a recession-inducing oil cost spike has actually decreased. Worldwide GDP is anticipated to grow by 2.4% this year, 0.2 ppt less than we predicted three months earlier, and 3.1% in 2027.

We forecast a 4.1% contraction in Middle East GDP this year (versus projected 3.6% growth before the war), greater than the decrease in the very first year of the Covid pandemic. Kuwait, Iran, Iraq and Qatar stand out as the hardest hit, owing to their inability to avoid the interruption to regional shipping, war-driven facilities damage and tourism losses.

Our 2026 outlook for the GCC is weaker than three months ago, with GDP projection to contract by 2.4% compared to a 0.2% decrease projected formerly. We anticipate Oman and Saudi Arabia to be the least adversely affected by the fallout from the conflict, with both economies continuing to broaden this year.

The financial damage incurred in the last few months is substantial. Saudi GDP data for Q1 showed growth 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 disruption hit late in the quarter.

Driving Non-Oil Growth via Strategic Diversification

Aside from Oman, all GCC manufacturers in addition to Iran and Iraq have suffered comprehensive oil and gas production losses considering that the start of the dispute. Might data reveal regional production almost halved 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 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 decrease in several decades. We then expect a 23.5% rebound next year, driven mainly by normalisation from a significantly depressed base. Meanwhile, oil prices have actually been volatile, alleviating below $85 per barrel as the interim arrangement was announced.

In the medium term, we expect oil costs to be somewhat lower than our pre-war baseline, as the UAE's departure from OPEC+ enables a progressive boost in its output towards the 5mn barrel per day production target as soon as trade normalises. Versus this backdrop, the UAE will accelerate the construction of a brand-new West-East pipeline that must double the capacity of export through Fujairah.

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