Key International Capital Prospects in the GCC Market

Dangers are tilted to the downside. In the occasion of an extended dispute, the existing influence on the region will be compoundedthrough elevated energy and food costs, declining trade, tourism and remittances, increased financial pressures, and displacement. "The existing crisis is a plain pointer of the work ahead for the area: not only to weather shocks, but to reconstruct more resistant economies with stronger macroeconomic basics, innovate and improve governance, invest in facilities, and boost employment-creating sectors," said.

With peace and the best action, nations can construct the organizations, capabilities and competitive sectors that develop chances for people." With this long-lasting vision in mind, the report takes a close take a look at the region's potential for commercial policy federal government actions to increase tactical organization activity as a chauffeur of financial growth and task creation.

ANSR July GCC PRs 50DR+

Federal governments in the area have actually embraced commercial policy at a high rate in the last decade, often through sovereign wealth funds and state-owned enterprises, but the outcomes have been mixed. The report highlights the critical requirement for strong organizations and mindful targeting of policies. "As nations deal with the heavy toll of the present dispute, it is important to also not forget the work required for long-lasting peace and prosperity," stated.

Why Economic Shifts Can Transform GCC Markets

Q2 2026: The ICAEW Economic Update Middle East, is a quarterly financial projection for the region prepared straight for the financing profession. The GCC economy deals with a marked contraction this year pending information of the US-Iran contract to end the war. We expect energy flows, tourist and investor belief to slowly normalise as war interruptions diminish.

ANSR July GCC PRs 50DR+

The interim agreement in between the United States and Iran is a substantial action towards reaching a full-blown deal. A complete return to normality in the Strait of Hormuz will likely take some time, but the danger of a recession-inducing oil cost spike has decreased. International GDP is expected to grow by 2.4% this year, 0.2 ppt less than we forecasted 3 months back, and 3.1% in 2027.

We forecast a 4.1% contraction in Middle East GDP this year (versus forecasted 3.6% expansion 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 struck, 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 3 months earlier, with GDP projection to contract by 2.4% compared to a 0.2% decrease projected 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 couple of months is considerable. Saudi GDP data for Q1 showed growth slowed to 3% y/y, with non-oil activities expanding by 2.9%, the weakest pace 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 disruption struck late in the quarter.

Future Middle Eastern Market Forecasts

Aside from Oman, all GCC manufacturers along with Iran and Iraq have suffered substantial oil and gas production losses considering that the start of the dispute. Might information show regional production nearly 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+

We anticipate GCC oil sector output to agreement by 14.5% this year, which will mark the steepest decrease in numerous decades. We then expect a 23.5% rebound next year, driven mostly by normalisation from a significantly depressed base. Oil prices have been unpredictable, easing below $85 per barrel as the interim agreement was announced.

In the medium term, we expect oil costs to be slightly lower than our pre-war baseline, as the UAE's departure from OPEC+ enables for a gradual boost in its output towards the 5mn barrel daily 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 capability of export through Fujairah.

The May PMI studies reported output growth reaching its strongest level in 3 months, driven largely by improved domestic need. However, they stay below long-run averages, with weak export orders and cost pressures from greater product and transport expenses are a common theme. Overall, we expect a 1.1% contraction in GCC non-energy sectors this year (compared to 4.2% growth pre-war) and a progressive healing over the rest of the decade.