Future-Proofing GCC Investments for 2026 Trends

Risks are slanted to the disadvantage. In case of a prolonged conflict, the existing impacts on the area will be compoundedthrough elevated energy and food costs, declining trade, tourism and remittances, increased financial pressures, and displacement. "The present crisis is a stark suggestion of the work ahead for the region: not just to weather shocks, however to rebuild more resistant economies with stronger macroeconomic principles, innovate and enhance governance, purchase facilities, and boost employment-creating sectors," stated.

With peace and the best action, countries can construct the organizations, abilities and competitive sectors that produce chances for people." With this long-lasting vision in mind, the report takes a close look at the area's potential for industrial policy government actions to increase strategic organization activity as a driver of financial development and task production.

ANSR July GCC PRs 50DR+

Governments in the region have adopted industrial policy at a high rate in the last years, often through sovereign wealth funds and state-owned business, however the results have actually been blended. The report highlights the critical need for strong organizations and mindful targeting of policies. "As countries deal with the heavy toll of today dispute, it is important to likewise not lose sight of the work needed for lasting peace and success," stated.

GCC Stock Trading Trends in 2026

Q2 2026: The ICAEW Economic Update Middle East, is a quarterly economic forecast for the area prepared directly for the finance profession. The GCC economy deals with a marked contraction this year pending details of the US-Iran contract to end the war. We anticipate energy flows, tourist and financier belief to gradually normalise as war disruptions subside.

ANSR July GCC PRs 50DR+

The interim agreement in between the US and Iran is a considerable action towards reaching a full-blown offer. A complete return to normality in the Strait of Hormuz will likely require time, however the danger of a recession-inducing oil rate spike has decreased. Worldwide GDP is expected to grow by 2.4% this year, 0.2 ppt less than we forecasted three months ago, and 3.1% in 2027.

We anticipate a 4.1% contraction in Middle East GDP this year (versus projected 3.6% growth before the war), higher than the decrease in the very first year of the Covid pandemic. Kuwait, Iran, Iraq and Qatar stand out as the hardest hit, owing to their inability to prevent the interruption to regional shipping, war-driven infrastructure damage and tourist losses.

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

The economic damage sustained in the last couple of months is significant. Saudi GDP data for Q1 showed development slowed to 3% y/y, with non-oil activities expanding by 2.9%, the weakest pace since 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.

Upcoming Middle Eastern Economic Projections

Aside from Oman, all GCC manufacturers in addition to Iran and Iraq have actually suffered substantial oil and gas production losses considering that the start of the dispute. Might information show regional production almost cut in half from pre-war levels, with the decrease 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 actually assisted prevent an even bigger plunge in output.

ANSR July GCC PRs 50DR+

Nonetheless, we forecast GCC oil sector output to agreement by 14.5% this year, which will mark the steepest decline in a number of years. We then anticipate a 23.5% rebound next year, driven largely by normalisation from a severely depressed base. Oil prices have actually been unpredictable, easing below $85 per barrel as the interim agreement was announced.

In the medium term, we anticipate oil costs to be slightly lower than our pre-war standard, as the UAE's departure from OPEC+ enables a progressive increase in its output towards the 5mn barrel daily production target as soon as trade normalises. Against this backdrop, the UAE will accelerate the building and construction of a brand-new West-East pipeline that must double the capacity of export through Fujairah.

The May PMI studies reported output growth reaching its greatest level in three months, driven mostly by improved domestic demand. However, they remain listed below long-run averages, with weak export orders and rate pressures from greater material and transport expenses are a typical theme. Overall, we anticipate a 1.1% contraction in GCC non-energy sectors this year (compared to 4.2% development pre-war) and a progressive recovery over the remainder of the years.