Positioning GCC Investments for 2026 Shifts

Risks are tilted to the downside. In the event of an extended conflict, the existing effect on the area will be compoundedthrough elevated energy and food prices, decreasing trade, tourist and remittances, increased fiscal pressures, and displacement. "The existing crisis is a plain reminder of the work ahead for the area: not only to weather shocks, but to restore more resilient economies with more powerful macroeconomic principles, innovate and enhance governance, purchase infrastructure, and enhance employment-creating sectors," said.

With peace and the ideal action, nations can develop the institutions, abilities and competitive sectors that create chances for individuals." With this long-lasting vision in mind, the report takes a close appearance at the region's capacity for commercial policy government actions to increase tactical company activity as a driver of financial growth and job production.

ANSR July GCC PRs 50DR+

Federal governments in the area have actually embraced commercial policy at a high rate in the last decade, typically through sovereign wealth funds and state-owned enterprises, however the results have been mixed. The report highlights the critical requirement for strong institutions and careful targeting of policies. "As countries deal with the heavy toll of today dispute, it is essential to likewise not lose sight of the work needed for lasting peace and success," stated.

Future GCC Financial Projections

Q2 2026: The ICAEW Economic Update Middle East, is a quarterly economic projection for the region prepared directly 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 flows, tourism and financier sentiment to slowly normalise as war disturbances go away.

ANSR July GCC PRs 50DR+

The interim contract between the United States and Iran is a considerable action towards reaching a full-blown offer. A complete go back to normality in the Strait of Hormuz will likely require time, however the risk of a recession-inducing oil price spike has actually decreased. International GDP is anticipated to grow by 2.4% this year, 0.2 ppt less than we projected 3 months ago, and 3.1% in 2027.

We anticipate a 4.1% contraction in Middle East GDP this year (versus forecasted 3.6% growth before the war), higher than the decline in the first year of the Covid pandemic. Kuwait, Iran, Iraq and Qatar stand apart as the hardest hit, owing to their failure to avoid the disturbance to local shipping, war-driven facilities damage and tourist losses.

Our 2026 outlook for the GCC is weaker than three months ago, with GDP forecast to agreement by 2.4% compared to a 0.2% decline forecasted previously. We expect Oman and Saudi Arabia to be the least adversely affected by the fallout from the dispute, with both economies continuing to expand this year.

The economic damage incurred in the last couple of 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 since 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.

Securing GCC Investments against 2026 Shifts

Aside from Oman, all GCC producers as well as Iran and Iraq have suffered substantial oil and gas production losses since the start of the dispute. Might information show regional production nearly 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 prevent an even larger 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 decrease in several years. We then expect a 23.5% rebound next year, driven mostly by normalisation from a seriously depressed base. Meanwhile, oil prices have been unpredictable, relieving listed below $85 per barrel as the interim contract was announced.

In the medium term, we anticipate oil rates to be a little lower than our pre-war standard, as the UAE's departure from OPEC+ permits for a gradual boost in its output towards the 5mn barrel each day production target as soon as trade normalises. Versus this backdrop, the UAE will speed up the building and construction of a new West-East pipeline that must double the capability of export through Fujairah.

The May PMI surveys reported output growth reaching its greatest level in 3 months, driven mainly by enhanced domestic demand. They remain listed below long-run averages, with weak export orders and price pressures from higher product and transport costs are a typical style. Overall, 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 years.