Assessing GCC Investment Resilience for 2026

Dangers are tilted to the disadvantage. In case of an extended conflict, the existing impacts on the area will be compoundedthrough raised energy and food prices, decreasing trade, tourism and remittances, increased fiscal pressures, and displacement. "The existing crisis is a stark pointer of the work ahead for the area: not just to weather shocks, but to restore more durable economies with more powerful macroeconomic fundamentals, innovate and improve governance, invest in infrastructure, and improve employment-creating sectors," stated.

With peace and the ideal action, nations can construct the institutions, capabilities and competitive sectors that develop chances for people." With this long-lasting vision in mind, the report takes a close appearance at the region's capacity for industrial policy federal government actions to increase tactical business activity as a motorist of economic 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 years, typically through sovereign wealth funds and state-owned enterprises, but the results have been blended. The report highlights the important need for strong organizations and mindful targeting of policies. "As nations deal with the heavy toll of the present dispute, it is important to likewise not lose sight of the work required for lasting peace and success," said.

Global Investment Prospects within the GCC

Q2 2026: The ICAEW Economic Update Middle East, is a quarterly economic projection for the region prepared directly for the finance occupation. The GCC economy faces a significant contraction this year pending information of the US-Iran contract to end the war. We expect energy flows, tourist and financier sentiment to slowly normalise as war interruptions subside.

ANSR July GCC PRs 50DR+

The interim arrangement between the US 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, but the risk of a recession-inducing oil rate spike has actually decreased. International GDP is anticipated to grow by 2.4% this year, 0.2 ppt less than we predicted three months back, 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 decline in the first year of the Covid pandemic. Kuwait, Iran, Iraq and Qatar stand out as the hardest struck, owing to their inability to prevent the disruption 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% decrease predicted formerly. We anticipate 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 financial damage sustained in the last few months is significant. Saudi GDP data for Q1 revealed development slowed to 3% y/y, with non-oil activities broadening by 2.9%, the weakest speed considering that 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 interruption struck late in the quarter.

Accelerating Industrial Success via Global Diversification

Aside from Oman, all GCC producers in addition to Iran and Iraq have suffered substantial oil and gas production losses considering that the start of the conflict. Might data reveal local production nearly 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 helped avoid 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 numerous years. We then anticipate a 23.5% rebound next year, driven mainly by normalisation from a seriously depressed base. Oil prices have actually been unpredictable, relieving listed below $85 per barrel as the interim arrangement 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 a steady increase in its output towards the 5mn barrel per day production target once trade normalises. Against this backdrop, the UAE will accelerate the construction of a new West-East pipeline that need to double the capacity of export through Fujairah.

The May PMI surveys reported output development reaching its strongest level in 3 months, driven largely by improved domestic demand. However, they stay listed below long-run averages, with weak export orders and cost pressures from greater material and transport costs are a common theme. Overall, 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 years.