Emerging Stock Market Patterns for 2026

Threats are slanted to the downside. In case of a prolonged conflict, the existing influence on the area will be compoundedthrough elevated energy and food rates, declining trade, tourism and remittances, increased fiscal pressures, and displacement. "The present crisis is a stark reminder of the work ahead for the area: not only to weather shocks, however to rebuild more durable economies with more powerful macroeconomic fundamentals, innovate and improve governance, invest in facilities, and improve employment-creating sectors," said.

With peace and the right action, nations can build the organizations, capabilities and competitive sectors that produce chances for individuals." With this long-term vision in mind, the report takes a close take a look at the area's capacity for industrial policy federal government actions to increase strategic company activity as a motorist of financial development and task creation.

ANSR July GCC PRs 50DR+

Federal governments in the area have adopted commercial policy at a high rate in the last years, typically through sovereign wealth funds and state-owned business, but the results have been blended. The report highlights the crucial need for strong organizations and cautious targeting of policies. "As countries deal with the heavy toll of the present dispute, it is very important to also not forget the work required for long-lasting peace and prosperity," said.

Advancing Economic Growth through Strategic Diversification

Q2 2026: The ICAEW Economic Update Middle East, is a quarterly economic forecast for the area prepared straight for the finance profession. The GCC economy deals with a marked contraction this year pending information of the US-Iran arrangement to end the war. We anticipate energy circulations, tourist and investor belief to slowly normalise as war disruptions decrease.

ANSR July GCC PRs 50DR+

The interim contract between the United States and Iran is a substantial action towards reaching a full-blown offer. A full return to normality in the Strait of Hormuz will likely take some time, however the danger of a recession-inducing oil rate spike has actually declined. Global GDP is expected to grow by 2.4% this year, 0.2 ppt less than we projected three months back, and 3.1% in 2027.

We forecast a 4.1% contraction in Middle East GDP this year (versus predicted 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 failure 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 ago, with GDP projection to agreement by 2.4% compared to a 0.2% decline forecasted previously. We anticipate Oman and Saudi Arabia to be the least negatively impacted by the fallout from the conflict, with both economies continuing to broaden this year.

The financial damage sustained in the last couple of months is substantial. Saudi GDP data for Q1 revealed growth slowed to 3% y/y, with non-oil activities broadening by 2.9%, the weakest speed 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.

How Economic Shifts Can Transform GCC Markets

Aside from Oman, all GCC manufacturers in addition to Iran and Iraq have suffered substantial oil and gas production losses given that the start of the dispute. Might data show regional 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 actually assisted prevent an even bigger plunge in output.

ANSR July GCC PRs 50DR+

We anticipate GCC oil sector output to agreement by 14.5% this year, which will mark the steepest decline in numerous decades. We then anticipate a 23.5% rebound next year, driven mainly by normalisation from a badly depressed base. Oil costs have actually been unpredictable, alleviating listed below $85 per barrel as the interim agreement was announced.

In the medium term, we expect oil costs to be a little lower than our pre-war standard, as the UAE's departure from OPEC+ permits a progressive increase in its output towards the 5mn barrel each 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 capacity of export through Fujairah.

The May PMI studies reported output development reaching its strongest level in 3 months, driven mostly by enhanced domestic demand. They stay below long-run averages, with weak export orders and rate pressures from greater material and transport costs are a common theme. In general, we anticipate a 1.1% contraction in GCC non-energy sectors this year (compared to 4.2% development pre-war) and a steady healing over the remainder of the years.