Top Foreign Capital Prospects for the GCC Market

Threats are slanted to the downside. In case of a prolonged conflict, the current influence on the area will be compoundedthrough elevated energy and food prices, decreasing trade, tourist and remittances, increased financial pressures, and displacement. "The current crisis is a stark reminder of the work ahead for the area: not just to weather shocks, but to restore more resilient economies with more powerful macroeconomic principles, innovate and enhance governance, purchase infrastructure, and improve employment-creating sectors," said.

With peace and the ideal action, nations can construct the organizations, abilities and competitive sectors that create chances for people." With this long-term vision in mind, the report takes a close take a look at the area's potential for industrial policy government actions to increase strategic organization activity as a driver of economic growth and job creation.

ANSR July GCC PRs 50DR+

Governments in the area have actually adopted commercial policy at a high rate in the last years, typically through sovereign wealth funds and state-owned business, however the results have been blended. The report highlights the crucial need for strong institutions and mindful targeting of policies. "As nations deal with the heavy toll of today conflict, it is crucial to likewise not forget the work required for long-lasting peace and prosperity," stated.

Top International Investment Prospects in the GCC Region

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

ANSR July GCC PRs 50DR+

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

We forecast a 4.1% contraction in Middle East GDP this year (versus predicted 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 inability to prevent the disturbance to local shipping, war-driven infrastructure damage and tourism 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 anticipate Oman and Saudi Arabia to be the least negatively affected by the fallout from the dispute, with both economies continuing to expand this year.

The financial damage incurred in the last few months is significant. Saudi GDP data for Q1 revealed development slowed to 3% y/y, with non-oil activities expanding 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 disruption struck late in the quarter.

Assessing Regional Investment Potential in 2026

Aside from Oman, all GCC manufacturers in addition to Iran and Iraq have actually suffered substantial oil and gas production losses since the start of the conflict. May information show regional production almost halved from pre-war levels, with the decline 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 agreement by 14.5% this year, which will mark the steepest decline in a number of decades. We then expect a 23.5% rebound next year, driven mainly by normalisation from a severely depressed base. Oil rates have been unstable, relieving below $85 per barrel as the interim contract was revealed.

In the medium term, we anticipate oil costs to be a little lower than our pre-war baseline, as the UAE's departure from OPEC+ allows for a gradual boost in its output towards the 5mn barrel per 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 ought to double the capacity of export through Fujairah.

The May PMI studies reported output growth reaching its greatest level in three months, driven largely by improved domestic need. However, they stay below long-run averages, with weak export orders and price pressures from greater product and transport costs are a common style. In general, we anticipate a 1.1% contraction in GCC non-energy sectors this year (compared to 4.2% development pre-war) and a gradual healing over the rest of the decade.