Foreign Investment Opportunities across the GCC

Threats are slanted to the drawback. In case of an extended dispute, the present effect on the area will be compoundedthrough raised energy and food prices, decreasing trade, tourist and remittances, increased financial pressures, and displacement. "The present crisis is a plain pointer of the work ahead for the region: not only to weather shocks, but to rebuild more resilient economies with stronger macroeconomic basics, innovate and enhance governance, buy facilities, and improve employment-creating sectors," said.

With peace and the best action, countries can build the institutions, capabilities and competitive sectors that produce opportunities for people." With this long-term vision in mind, the report takes a close appearance at the area's capacity for industrial policy government actions to increase strategic organization activity as a chauffeur of economic development and job production.

ANSR July GCC PRs 50DR+

Federal governments in the region have embraced industrial policy at a high rate in the last decade, often through sovereign wealth funds and state-owned business, but the outcomes have actually been mixed. The report highlights the important requirement for strong organizations and mindful targeting of policies. "As countries deal with the heavy toll of today conflict, it is very important to also not lose sight of the work required for lasting peace and prosperity," stated.

The 2026 Business Climate of the GCC

Q2 2026: The ICAEW Economic Update Middle East, is a quarterly financial projection for the region prepared directly for the finance profession. The GCC economy deals with a marked contraction this year pending details of the US-Iran agreement to end the war. We expect energy circulations, tourist and financier belief to gradually normalise as war interruptions go away.

ANSR July GCC PRs 50DR+

The interim arrangement in between the United States and Iran is a significant action towards reaching a full-blown deal. A full go back to normality in the Strait of Hormuz will likely require time, but the risk of a recession-inducing oil price spike has decreased. Global GDP is anticipated to grow by 2.4% this year, 0.2 ppt less than we forecasted three months ago, and 3.1% in 2027.

We forecast 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 stand out as the hardest hit, owing to their inability to avoid the disruption to local shipping, war-driven facilities damage and tourism losses.

Our 2026 outlook for the GCC is weaker than three months ago, with GDP forecast to contract by 2.4% compared to a 0.2% decline forecasted 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 financial damage sustained in the last few months is substantial. Saudi GDP data for Q1 revealed growth slowed to 3% y/y, with non-oil activities broadening by 2.9%, the weakest pace because 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 disturbance hit late in the quarter.

Analyzing Regional Market Potential for 2026

Aside from Oman, all GCC producers along with Iran and Iraq have suffered comprehensive oil and gas production losses considering that the start of the conflict. Might data reveal 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 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. Oil rates have been volatile, alleviating listed below $85 per barrel as the interim agreement was revealed.

In the medium term, we expect oil costs to be somewhat lower than our pre-war standard, as the UAE's departure from OPEC+ enables for a progressive boost in its output towards the 5mn barrel daily production target once trade normalises. Against this background, the UAE will speed up the building of a brand-new West-East pipeline that must double the capability of export through Fujairah.

The May PMI studies reported output development reaching its strongest level in three months, driven largely by improved domestic need. Nevertheless, they stay below long-run averages, with weak export orders and price pressures from greater product and transport expenses are a common style. In general, we anticipate a 1.1% contraction in GCC non-energy sectors this year (compared to 4.2% development pre-war) and a steady recovery over the rest of the decade.