Positioning GCC Investments against 2026 Shifts

Dangers are tilted to the downside. In the occasion of a prolonged conflict, the existing effect on the region will be compoundedthrough elevated energy and food prices, declining trade, tourism and remittances, increased fiscal pressures, and displacement. "The current crisis is a stark tip of the work ahead for the area: not just to weather shocks, however to reconstruct more resilient economies with more powerful macroeconomic basics, innovate and enhance governance, invest in facilities, and enhance employment-creating sectors," stated.

With peace and the ideal action, countries can develop the organizations, capabilities and competitive sectors that create chances for people." With this long-lasting vision in mind, the report takes a close take a look at the area's capacity for commercial policy government actions to increase strategic company activity as a chauffeur of financial growth and job development.

ANSR July GCC PRs 50DR+

Governments in the area have embraced industrial policy at a high rate in the last years, often through sovereign wealth funds and state-owned business, however the results have actually been blended. The report highlights the important requirement for strong organizations and cautious targeting of policies. "As countries face the heavy toll of today dispute, it is necessary to likewise not forget the work needed for lasting peace and success," stated.

Mastering Wealth Strategies for a 2026 Economy

Q2 2026: The ICAEW Economic Update Middle East, is a quarterly economic forecast for the area prepared directly for the financing occupation. The GCC economy faces a significant contraction this year pending information of the US-Iran arrangement to end the war. We anticipate energy flows, tourist and investor sentiment to slowly normalise as war disturbances decrease.

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The interim arrangement between the US and Iran is a considerable action towards reaching a full-blown offer. A full go back to normality in the Strait of Hormuz will likely take time, but the risk of a recession-inducing oil cost spike has actually decreased. International GDP is expected to grow by 2.4% this year, 0.2 ppt less than we projected 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), greater than the decrease in the first year of the Covid pandemic. Kuwait, Iran, Iraq and Qatar stand out as the hardest struck, owing to their inability to avoid the disruption to regional shipping, war-driven facilities damage and tourist losses.

Our 2026 outlook for the GCC is weaker than three months back, with GDP projection to contract by 2.4% compared to a 0.2% decline predicted formerly. We expect 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 sustained in the last few months is substantial. Saudi GDP data for Q1 showed development 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 disturbance struck late in the quarter.

Critical Equity Market Insights for GCC Investors

Aside from Oman, all GCC producers along with Iran and Iraq have suffered extensive oil and gas production losses since the start of the dispute. May data reveal 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 assisted avoid an even bigger plunge in output.

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However, we anticipate GCC oil sector output to agreement by 14.5% this year, which will mark the steepest decline in several years. We then expect a 23.5% rebound next year, driven mainly by normalisation from a significantly depressed base. On the other hand, oil prices have actually been unstable, easing listed below $85 per barrel as the interim agreement was announced.

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

The May PMI surveys reported output development reaching its strongest level in three months, driven largely by enhanced domestic need. Nevertheless, they stay below long-run averages, with weak export orders and price pressures from higher product and transportation expenses are a common style. Overall, we anticipate a 1.1% contraction in GCC non-energy sectors this year (compared to 4.2% growth pre-war) and a steady recovery over the rest of the decade.