Foreign Capital Opportunities across the GCC

Threats are tilted to the drawback. In the event of an extended conflict, the current impacts on the region will be compoundedthrough raised energy and food costs, declining trade, tourism and remittances, increased financial pressures, and displacement. "The present crisis is a stark pointer of the work ahead for the region: not only to weather shocks, but to reconstruct more durable economies with stronger macroeconomic principles, innovate and enhance governance, purchase infrastructure, and boost employment-creating sectors," said.

With peace and the ideal action, countries can build the organizations, capabilities and competitive sectors that create opportunities for individuals." With this long-lasting vision in mind, the report takes a close take a look at the area's potential for commercial policy government actions to increase strategic organization activity as a driver of financial development and task creation.

ANSR July GCC PRs 50DR+

Federal governments in the area have embraced commercial policy at a high rate in the last years, often through sovereign wealth funds and state-owned business, but the outcomes have actually been mixed. The report highlights the vital requirement for strong organizations and cautious targeting of policies. "As countries deal with the heavy toll of today conflict, it is necessary to likewise not lose sight of the work required for long-lasting peace and success," said.

Upcoming Regional Market Outlook

Q2 2026: The ICAEW Economic Update Middle East, is a quarterly economic forecast for the area prepared directly for the finance occupation. The GCC economy deals with a marked contraction this year pending information of the US-Iran arrangement to end the war. We expect energy circulations, tourism and investor sentiment to gradually normalise as war disturbances subside.

ANSR July GCC PRs 50DR+

The interim contract between the United States and Iran is a substantial action towards reaching a full-blown deal. A complete go back to normality in the Strait of Hormuz will likely take some time, however the danger of a recession-inducing oil price spike has actually declined. International 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 anticipate 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 out as the hardest hit, owing to their inability to avoid the disruption to regional shipping, war-driven infrastructure damage and tourism losses.

Our 2026 outlook for the GCC is weaker than three months earlier, with GDP forecast to contract by 2.4% compared to a 0.2% decrease projected formerly. We expect Oman and Saudi Arabia to be the least adversely affected by the fallout from the conflict, with both economies continuing to broaden this year.

The financial damage sustained in the last few months is significant. Saudi GDP data for Q1 showed development slowed to 3% y/y, with non-oil activities broadening by 2.9%, the weakest pace considering 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.

Assessing GCC Investment Potential in 2026

Aside from Oman, all GCC manufacturers as well as Iran and Iraq have suffered comprehensive oil and gas production losses given that 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, including by Saudi Arabia through the East-West Pipeline and the UAE through the Habshan-Fujairah pipeline, have assisted prevent an even bigger plunge in output.

ANSR July GCC PRs 50DR+

We anticipate GCC oil sector output to contract by 14.5% this year, which will mark the steepest decrease in numerous decades. We then anticipate a 23.5% rebound next year, driven largely by normalisation from a seriously depressed base. On the other hand, oil costs have actually been unpredictable, reducing listed below $85 per barrel as the interim agreement was revealed.

In the medium term, we expect oil prices to be a little lower than our pre-war standard, as the UAE's departure from OPEC+ allows for a steady boost in its output towards the 5mn barrel each day production target once trade normalises. Versus this background, the UAE will accelerate the building and construction of a brand-new West-East pipeline that ought to double the capacity of export through Fujairah.

The May PMI studies reported output growth reaching its strongest level in 3 months, driven mainly by enhanced domestic demand. Nevertheless, they remain below long-run averages, with weak export orders and price pressures from greater product and transportation expenses 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 recovery over the rest of the decade.