Evaluating GCC Market Potential for 2026

Dangers are tilted to the drawback. In the occasion of a prolonged dispute, the existing effect on the region will be compoundedthrough raised energy and food prices, declining trade, tourist and remittances, increased financial pressures, and displacement. "The present crisis is a stark pointer of the work ahead for the area: not just to weather shocks, however to rebuild more resilient economies with stronger macroeconomic fundamentals, innovate and improve governance, buy facilities, and increase employment-creating sectors," stated.

With peace and the ideal action, nations can develop the organizations, abilities and competitive sectors that produce opportunities for people." With this long-lasting vision in mind, the report takes a close look at the region's potential for commercial policy federal government actions to increase tactical business activity as a motorist of economic development and task production.

ANSR July GCC PRs 50DR+

Federal governments in the region have actually embraced industrial policy at a high rate in the last decade, frequently through sovereign wealth funds and state-owned enterprises, but the results have actually been blended. The report highlights the crucial requirement for strong institutions and cautious targeting of policies. "As countries face the heavy toll of the present dispute, it is very important to also not forget the work required for long-lasting peace and success," said.

GCC Equity Trading Patterns in 2026

Q2 2026: The ICAEW Economic Update Middle East, is a quarterly economic projection for the area prepared straight for the finance occupation. The GCC economy faces a significant contraction this year pending details of the US-Iran agreement to end the war. We anticipate energy flows, tourism and financier belief to slowly normalise as war disruptions subside.

ANSR July GCC PRs 50DR+

The interim agreement in between the United States and Iran is a substantial step towards reaching a full-blown offer. A complete return to normality in the Strait of Hormuz will likely require time, but the danger of a recession-inducing oil rate spike has actually decreased. Worldwide GDP is anticipated to grow by 2.4% this year, 0.2 ppt less than we projected 3 months earlier, and 3.1% in 2027.

We anticipate a 4.1% contraction in Middle East GDP this year (versus projected 3.6% expansion before the war), greater than the decline in the first year of the Covid pandemic. Kuwait, Iran, Iraq and Qatar stick out as the hardest struck, owing to their inability to avoid the interruption to local shipping, war-driven infrastructure damage and tourist losses.

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

The financial damage incurred 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 rate 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 struck late in the quarter.

GCC Stock Trading Trends for 2026

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

ANSR July GCC PRs 50DR+

Nevertheless, we forecast GCC oil sector output to agreement by 14.5% this year, which will mark the steepest decline in a number of decades. We then anticipate a 23.5% rebound next year, driven mostly by normalisation from a severely depressed base. Meanwhile, oil costs have actually been unpredictable, reducing listed below $85 per barrel as the interim agreement was announced.

In the medium term, we expect oil costs to be somewhat lower than our pre-war baseline, as the UAE's departure from OPEC+ enables a progressive increase in its output towards the 5mn barrel each day production target when trade normalises. Against this background, the UAE will speed up the construction of a new West-East pipeline that should double the capability of export through Fujairah.

The May PMI surveys reported output development reaching its strongest level in three months, driven largely by improved domestic demand. They stay listed below long-run averages, with weak export orders and cost pressures from higher material and transportation expenses are a typical style. Overall, we expect a 1.1% contraction in GCC non-energy sectors this year (compared to 4.2% growth pre-war) and a steady healing over the rest of the decade.