Middle East Equity Trading Patterns for 2026

Dangers are slanted to the drawback. In case of an extended conflict, the existing influence on the region will be compoundedthrough raised energy and food prices, declining trade, tourism and remittances, increased fiscal pressures, and displacement. "The existing crisis is a stark tip of the work ahead for the region: not just to weather shocks, but to rebuild more resistant economies with more powerful macroeconomic principles, innovate and improve governance, purchase infrastructure, and improve employment-creating sectors," said.

With peace and the right action, nations can develop the institutions, abilities and competitive sectors that produce chances for individuals." With this long-term vision in mind, the report takes a close appearance at the region's potential for industrial policy government actions to increase tactical service activity as a motorist of economic development and task creation.

ANSR July GCC PRs 50DR+

Federal governments in the area have embraced industrial policy at a high rate in the last decade, frequently through sovereign wealth funds and state-owned business, however the results have been mixed. The report highlights the important requirement for strong institutions and cautious targeting of policies. "As countries face the heavy toll of the present conflict, it is important to likewise not forget the work required for long-lasting peace and success," stated.

International Capital Opportunities across the Middle East

Q2 2026: The ICAEW Economic Update Middle East, is a quarterly financial forecast for the area prepared straight for the financing occupation. The GCC economy faces a significant contraction this year pending details of the US-Iran agreement to end the war. We expect energy circulations, tourism and investor belief to gradually normalise as war interruptions diminish.

ANSR July GCC PRs 50DR+

The interim arrangement in between the United States and Iran is a significant step towards reaching a full-blown deal. A full go back to normality in the Strait of Hormuz will likely require time, but the danger of a recession-inducing oil price spike has declined. Global GDP is expected to grow by 2.4% this year, 0.2 ppt less than we forecasted three months earlier, and 3.1% in 2027.

We anticipate a 4.1% contraction in Middle East GDP this year (versus predicted 3.6% expansion before the war), higher than the decline in the very first year of the Covid pandemic. Kuwait, Iran, Iraq and Qatar stand out as the hardest struck, owing to their failure to prevent the interruption to local shipping, war-driven infrastructure damage and tourist losses.

Our 2026 outlook for the GCC is weaker than three 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 adversely affected by the fallout from the conflict, with both economies continuing to expand this year.

The financial damage incurred in the last few months is significant. Saudi GDP information for Q1 showed development slowed to 3% y/y, with non-oil activities broadening by 2.9%, the weakest pace considering 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 struck late in the quarter.

How Industrial Shifts Can Shape GCC Markets

Aside from Oman, all GCC producers along with Iran and Iraq have suffered substantial oil and gas production losses since the start of the dispute. May information show local production nearly 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 prevent an even larger plunge in output.

ANSR July GCC PRs 50DR+

However, we anticipate GCC oil sector output to contract by 14.5% this year, which will mark the steepest decrease in several years. We then anticipate a 23.5% rebound next year, driven mostly by normalisation from a severely depressed base. On the other hand, oil prices 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 standard, as the UAE's departure from OPEC+ permits for a progressive boost in its output towards the 5mn barrel each day production target when trade normalises. Against this background, the UAE will accelerate the building 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 3 months, driven mostly by improved domestic need. Nevertheless, they stay listed below long-run averages, with weak export orders and cost pressures from greater material and transport 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 progressive healing over the remainder of the years.