Securing Regional Investments for 2026 Shifts

Risks are tilted to the downside. In case of a prolonged conflict, the present influence on the area will be compoundedthrough elevated energy and food prices, decreasing trade, tourist and remittances, increased fiscal pressures, and displacement. "The present crisis is a plain pointer of the work ahead for the area: not just to weather shocks, but to restore more durable economies with more powerful macroeconomic basics, innovate and enhance governance, buy infrastructure, and boost employment-creating sectors," said.

With peace and the ideal action, nations can build the organizations, abilities and competitive sectors that produce chances for individuals." With this long-lasting vision in mind, the report takes a close look at the region's potential for commercial policy government actions to increase tactical business activity as a motorist of economic development and task development.

ANSR July GCC PRs 50DR+

Federal governments in the area have actually embraced commercial policy at a high rate in the last decade, often through sovereign wealth funds and state-owned enterprises, but the results have been blended. The report highlights the important need for strong organizations and cautious targeting of policies. "As nations deal with the heavy toll of the present dispute, it is very important to also not forget the work required for lasting peace and success," stated.

Global Investment Opportunities within the Middle East

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

ANSR July GCC PRs 50DR+

The interim contract between the US and Iran is a considerable step towards reaching a full-blown offer. A complete return to normality in the Strait of Hormuz will likely take time, however the risk of a recession-inducing oil rate spike has declined. 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 projected 3.6% expansion before the war), higher than the decline 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 infrastructure damage and tourism losses.

Our 2026 outlook for the GCC is weaker than three months earlier, with GDP projection to agreement by 2.4% compared to a 0.2% decline projected formerly. We expect Oman and Saudi Arabia to be the least negatively affected by the fallout from the conflict, 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 broadening by 2.9%, the weakest rate given that 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 interruption hit late in the quarter.

Why Economic Diversification Will Transform Arabian Markets

Aside from Oman, all GCC manufacturers along with Iran and Iraq have actually suffered substantial oil and gas production losses since the start of the dispute. May data show regional production almost halved 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 assisted avoid 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 decrease in several decades. We then expect a 23.5% rebound next year, driven mostly by normalisation from a severely depressed base. Meanwhile, oil costs have actually been unstable, alleviating below $85 per barrel as the interim arrangement was revealed.

In the medium term, we anticipate oil prices to be slightly lower than our pre-war baseline, as the UAE's departure from OPEC+ permits a steady increase in its output towards the 5mn barrel per day production target as soon as trade normalises. Against this backdrop, the UAE will speed up 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 strongest level in 3 months, driven mostly by enhanced domestic need. They stay listed below long-run averages, with weak export orders and rate pressures from higher material and transportation expenses are a common style. In general, we expect a 1.1% contraction in GCC non-energy sectors this year (compared to 4.2% growth pre-war) and a progressive recovery over the rest of the years.