Top International Investment Prospects for the GCC Region

Risks are slanted to the drawback. In case of a prolonged dispute, the existing effect on the region will be compoundedthrough raised energy and food costs, decreasing trade, tourism and remittances, increased financial pressures, and displacement. "The current crisis is a stark reminder 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, buy facilities, and increase employment-creating sectors," stated.

With peace and the right action, nations can construct the organizations, capabilities and competitive sectors that produce chances for individuals." With this long-lasting vision in mind, the report takes a close appearance at the area's capacity for industrial policy government actions to increase tactical business activity as a driver of financial development and task development.

ANSR July GCC PRs 50DR+

Federal governments in the area have actually adopted industrial policy at a high rate in the last decade, typically through sovereign wealth funds and state-owned business, however the outcomes have been blended. The report highlights the critical requirement for strong organizations and cautious targeting of policies. "As countries face the heavy toll of today dispute, it is essential to also not forget the work required for long-lasting peace and prosperity," stated.

Future-Proofing GCC Portfolios against 2026 Shifts

Q2 2026: The ICAEW Economic Update Middle East, is a quarterly financial forecast for the area prepared straight for the finance profession. The GCC economy faces a significant contraction this year pending information of the US-Iran agreement to end the war. We expect energy circulations, tourism and investor sentiment to slowly normalise as war interruptions decrease.

ANSR July GCC PRs 50DR+

The interim arrangement in between the US and Iran is a significant step towards reaching a full-blown deal. A full go back to normality in the Strait of Hormuz will likely take time, however the danger of a recession-inducing oil price spike has actually decreased. International GDP is anticipated to grow by 2.4% this year, 0.2 ppt less than we predicted 3 months back, and 3.1% in 2027.

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

Our 2026 outlook for the GCC is weaker than 3 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 negatively affected by the fallout from the conflict, with both economies continuing to expand this year.

The economic damage sustained in the last few months is substantial. Saudi GDP information for Q1 showed growth slowed to 3% y/y, with non-oil activities broadening by 2.9%, the weakest speed because 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 interruption struck late in the quarter.

Key Stock Capital Insights for GCC Growth

Aside from Oman, all GCC manufacturers as well as Iran and Iraq have suffered comprehensive oil and gas production losses considering that the start of the dispute. May data show regional production nearly cut in half from pre-war levels, with the decline 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 assisted prevent an even bigger plunge in output.

ANSR July GCC PRs 50DR+

We forecast GCC oil sector output to contract by 14.5% this year, which will mark the steepest decline in several decades. We then expect a 23.5% rebound next year, driven largely by normalisation from a significantly depressed base. On the other hand, oil rates have actually been unstable, alleviating below $85 per barrel as the interim arrangement was revealed.

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 for a steady increase in its output towards the 5mn barrel each day production target as soon as trade normalises. Versus this background, the UAE will accelerate the building and construction of a new West-East pipeline that should double the capacity of export through Fujairah.

The May PMI surveys reported output development reaching its greatest level in 3 months, driven largely by improved domestic need. They stay listed below long-run averages, with weak export orders and cost pressures from higher material and transportation expenses are a common theme. In general, we anticipate a 1.1% contraction in GCC non-energy sectors this year (compared to 4.2% growth pre-war) and a gradual healing over the remainder of the decade.