Middle East Stock Market Patterns in 2026

Dangers are tilted to the disadvantage. In case of an extended dispute, the present impacts on the region will be compoundedthrough elevated energy and food prices, declining trade, tourist and remittances, increased fiscal pressures, and displacement. "The current crisis is a plain suggestion of the work ahead for the region: not just to weather shocks, but to rebuild more resilient economies with more powerful macroeconomic fundamentals, innovate and enhance governance, invest in facilities, and increase employment-creating sectors," stated.

With peace and the best action, nations can construct the organizations, abilities and competitive sectors that produce chances 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 federal government actions to increase tactical service activity as a motorist of economic growth and task creation.

ANSR July GCC PRs 50DR+

Federal governments in the region have adopted industrial policy at a high rate in the last years, typically through sovereign wealth funds and state-owned enterprises, however the results have actually been mixed. The report highlights the important requirement for strong institutions and mindful targeting of policies. "As countries deal with the heavy toll of the present conflict, it is essential to also not lose sight of the work needed for lasting peace and success," stated.

Future GCC Economic Outlook

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 information of the US-Iran arrangement to end the war. We expect energy flows, tourism and financier belief to slowly normalise as war interruptions decrease.

ANSR July GCC PRs 50DR+

The interim agreement in between the US 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 require time, but the risk of a recession-inducing oil rate spike has declined. Worldwide GDP is anticipated to grow by 2.4% this year, 0.2 ppt less than we forecasted three months back, 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 apart as the hardest struck, owing to their inability to avoid the disturbance to regional shipping, war-driven facilities damage and tourist 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% decline forecasted formerly. We expect Oman and Saudi Arabia to be the least negatively impacted by the fallout from the dispute, with both economies continuing to expand this year.

The financial damage incurred in the last few 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 speed given 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 disturbance struck late in the quarter.

Critical Stock Capital Insights for GCC Growth

Aside from Oman, all GCC manufacturers in addition to Iran and Iraq have actually suffered extensive oil and gas production losses because the start of the dispute. Might information reveal local production nearly halved 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 helped avoid an even larger plunge in output.

ANSR July GCC PRs 50DR+

Nevertheless, we forecast GCC oil sector output to contract by 14.5% this year, which will mark the steepest decrease in a number of years. We then anticipate a 23.5% rebound next year, driven largely by normalisation from a significantly depressed base. Oil rates have been unpredictable, reducing below $85 per barrel as the interim contract was announced.

In the medium term, we expect oil prices to be somewhat lower than our pre-war baseline, as the UAE's departure from OPEC+ enables a steady boost in its output towards the 5mn barrel each day production target once trade normalises. Against this backdrop, the UAE will speed up the building and construction of a new West-East pipeline that need to double the capacity of export through Fujairah.

The May PMI studies reported output growth reaching its greatest level in three months, driven largely by improved domestic need. They remain below long-run averages, with weak export orders and price pressures from higher material and transport costs are a typical style. In general, 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 remainder of the decade.