Key International Capital Avenues for the GCC Market

Dangers are slanted to the drawback. In case of an extended dispute, the current impacts on the area will be compoundedthrough raised energy and food prices, decreasing trade, tourism and remittances, increased financial pressures, and displacement. "The current crisis is a plain tip of the work ahead for the area: not just to weather shocks, however to reconstruct more resilient economies with stronger macroeconomic fundamentals, innovate and improve governance, invest in facilities, and boost employment-creating sectors," said.

With peace and the ideal action, nations can build the organizations, abilities and competitive sectors that develop opportunities for individuals." With this long-lasting vision in mind, the report takes a close take a look at the region's capacity for industrial policy federal government actions to increase strategic service activity as a driver of economic development and task development.

ANSR July GCC PRs 50DR+

Governments in the area have embraced commercial policy at a high rate in the last years, typically through sovereign wealth funds and state-owned enterprises, however the results have actually been mixed. The report highlights the critical need for strong institutions and careful targeting of policies. "As countries face the heavy toll of today dispute, it is necessary to likewise not forget the work needed for long-lasting peace and success," stated.

Securing Regional Portfolios for 2026 Shifts

Q2 2026: The ICAEW Economic Update Middle East, is a quarterly financial projection for the region prepared directly for the finance occupation. The GCC economy deals with a significant contraction this year pending details of the US-Iran agreement to end the war. We anticipate energy flows, tourist and investor belief to slowly normalise as war disturbances decrease.

ANSR July GCC PRs 50DR+

The interim contract in between the US and Iran is a considerable action towards reaching a full-blown deal. A full return to normality in the Strait of Hormuz will likely take time, but the threat of a recession-inducing oil price spike has actually declined. Global 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 predicted 3.6% growth before the war), higher than the decline in the first year of the Covid pandemic. Kuwait, Iran, Iraq and Qatar stand out as the hardest struck, owing to their inability to prevent the disturbance to local shipping, war-driven facilities damage and tourist losses.

Our 2026 outlook for the GCC is weaker than 3 months ago, with GDP forecast to agreement by 2.4% compared to a 0.2% decline forecasted formerly. We anticipate 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 financial damage sustained in the last few months is considerable. Saudi GDP information for Q1 showed development slowed to 3% y/y, with non-oil activities expanding 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 struck late in the quarter.

Future Regional Financial Forecasts

Aside from Oman, all GCC producers along with Iran and Iraq have suffered comprehensive oil and gas production losses since the start of the conflict. Might data show regional production nearly 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 helped prevent an even bigger plunge in output.

ANSR July GCC PRs 50DR+

We forecast GCC oil sector output to contract by 14.5% this year, which will mark the steepest decline in a number of decades. We then expect a 23.5% rebound next year, driven largely by normalisation from a significantly depressed base. Oil rates have actually been volatile, relieving below $85 per barrel as the interim contract was revealed.

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

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