Navigating Wealth Strategies in a Global Economy

Threats are slanted to the disadvantage. In case of a prolonged conflict, the existing influence on the region will be compoundedthrough elevated energy and food prices, declining trade, tourism and remittances, increased financial pressures, and displacement. "The existing crisis is a stark reminder of the work ahead for the area: not just to weather shocks, however to restore more resilient economies with stronger macroeconomic basics, innovate and enhance governance, invest in facilities, and boost employment-creating sectors," said.

With peace and the best action, nations can construct the institutions, abilities and competitive sectors that create chances for people." With this long-term vision in mind, the report takes a close look at the area's potential for commercial policy government actions to increase strategic company activity as a motorist of economic development and task production.

ANSR July GCC PRs 50DR+

Federal governments in the area have adopted commercial policy at a high rate in the last decade, typically through sovereign wealth funds and state-owned business, however the results have actually been mixed. The report highlights the critical need for strong institutions and careful targeting of policies. "As nations deal with the heavy toll of the present conflict, it is crucial to also not lose sight of the work needed for long-lasting peace and prosperity," stated.

Why Economic Shifts Can Transform GCC Markets

Q2 2026: The ICAEW Economic Update Middle East, is a quarterly economic projection for the region prepared straight for the financing profession. The GCC economy deals with a significant contraction this year pending details of the US-Iran arrangement to end the war. We expect energy flows, tourist and investor sentiment to gradually normalise as war interruptions decrease.

ANSR July GCC PRs 50DR+

The interim agreement in between the United States and Iran is a significant action towards reaching a full-blown offer. A complete return to normality in the Strait of Hormuz will likely require time, however the danger of a recession-inducing oil cost spike has actually declined. Worldwide GDP is anticipated to grow by 2.4% this year, 0.2 ppt less than we predicted three months ago, and 3.1% in 2027.

We anticipate a 4.1% contraction in Middle East GDP this year (versus forecasted 3.6% expansion 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 avoid the disruption to local shipping, war-driven facilities damage and tourist losses.

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

The economic damage incurred in the last few months is significant. Saudi GDP data for Q1 revealed growth slowed to 3% y/y, with non-oil activities expanding by 2.9%, the weakest rate since the Covid pandemic. On a seasonally adjusted basis, GDP contracted 1.2% q/q, driven by a 6.8% fall in oil activities as the Strait of Hormuz disturbance struck late in the quarter.

Top Foreign Capital Prospects for the GCC Region

Aside from Oman, all GCC manufacturers along with Iran and Iraq have suffered extensive oil and gas production losses because the start of the conflict. Might information show regional production almost cut in half from pre-war levels, with the decrease 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 actually helped avoid an even bigger plunge in output.

ANSR July GCC PRs 50DR+

However, we forecast GCC oil sector output to contract by 14.5% this year, which will mark the steepest decline in a number of years. We then anticipate a 23.5% rebound next year, driven largely by normalisation from a severely depressed base. Oil prices have actually been unpredictable, alleviating below $85 per barrel as the interim contract was announced.

In the medium term, we expect oil rates to be somewhat lower than our pre-war baseline, as the UAE's departure from OPEC+ enables for a steady increase in its output towards the 5mn barrel each day production target once trade normalises. Against this backdrop, the UAE will accelerate the construction of a new West-East pipeline that should double the capability of export through Fujairah.

The May PMI studies reported output growth reaching its greatest level in three months, driven mainly by enhanced domestic demand. They remain below long-run averages, with weak export orders and price pressures from higher material and transport expenses are a typical 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 recovery over the rest of the years.