Future Investment Climate in the GCC

Threats are slanted to the downside. In the event of an extended dispute, the present effects on the area will be compoundedthrough raised energy and food rates, declining trade, tourist and remittances, increased fiscal pressures, and displacement. "The present crisis is a stark pointer of the work ahead for the region: not just to weather shocks, but to rebuild more resistant economies with more powerful macroeconomic principles, innovate and improve governance, purchase infrastructure, and boost employment-creating sectors," said.

With peace and the ideal action, countries can develop the institutions, capabilities and competitive sectors that create opportunities for people." With this long-lasting vision in mind, the report takes a close look at the area's potential for industrial policy government actions to increase strategic service activity as a driver of financial development and task creation.

ANSR July GCC PRs 50DR+

Federal governments in the region have actually embraced commercial policy at a high rate in the last years, typically through sovereign wealth funds and state-owned enterprises, but the outcomes have actually been blended. The report highlights the vital need for strong organizations and careful targeting of policies. "As nations face the heavy toll of the present dispute, it is necessary to also not lose sight of the work required for lasting peace and success," said.

GCC Stock Trading Patterns for 2026

Q2 2026: The ICAEW Economic Update Middle East, is a quarterly economic forecast 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 agreement to end the war. We anticipate energy flows, tourism and investor belief to slowly normalise as war interruptions diminish.

ANSR July GCC PRs 50DR+

The interim contract in between the United States and Iran is a considerable step towards reaching a full-blown deal. A complete return to normality in the Strait of Hormuz will likely take some time, but the threat of a recession-inducing oil cost spike has decreased. Global GDP is anticipated to grow by 2.4% this year, 0.2 ppt less than we projected 3 months ago, and 3.1% in 2027.

We forecast a 4.1% contraction in Middle East GDP this year (versus forecasted 3.6% growth before the war), greater than the decline 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 prevent the disruption to regional shipping, war-driven infrastructure damage and tourist losses.

Our 2026 outlook for the GCC is weaker than 3 months back, with GDP projection to agreement by 2.4% compared to a 0.2% decline projected previously. We anticipate Oman and Saudi Arabia to be the least negatively impacted by the fallout from the conflict, with both economies continuing to expand this year.

The economic damage sustained in the last few months is considerable. 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 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.

2026 GCC Economic Projections

Aside from Oman, all GCC manufacturers as well as Iran and Iraq have suffered extensive oil and gas production losses given that the start of the dispute. Might data show local production nearly cut in half from pre-war levels, with the decline 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 decrease in a number of decades. We then anticipate a 23.5% rebound next year, driven mostly by normalisation from a seriously depressed base. On the other hand, oil costs have actually been unstable, relieving below $85 per barrel as the interim agreement was announced.

In the medium term, we expect oil prices to be a little lower than our pre-war standard, as the UAE's departure from OPEC+ enables a gradual boost in its output towards the 5mn barrel each day production target as soon as trade normalises. Versus this background, the UAE will accelerate the 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 strongest level in three months, driven mostly by enhanced domestic demand. They stay below long-run averages, with weak export orders and price pressures from higher product and transport costs 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 progressive recovery over the rest of the years.