GCC Stock Market Trends in 2026

Dangers are slanted to the downside. In the event of a prolonged conflict, the current effect on the area will be compoundedthrough elevated energy and food costs, decreasing trade, tourism and remittances, increased financial pressures, and displacement. "The existing crisis is a plain pointer of the work ahead for the region: not just to weather shocks, however to reconstruct more resistant economies with stronger macroeconomic principles, innovate and enhance governance, purchase infrastructure, and boost employment-creating sectors," said.

With peace and the right action, countries can build 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 industrial policy federal government actions to increase strategic organization activity as a chauffeur of financial development and job creation.

ANSR July GCC PRs 50DR+

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

Key Economic Diversification in 2026

Q2 2026: The ICAEW Economic Update Middle East, is a quarterly financial forecast for the area prepared straight for the finance occupation. The GCC economy faces a significant contraction this year pending details of the US-Iran arrangement to end the war. We anticipate energy circulations, tourism and financier belief to gradually normalise as war disruptions diminish.

ANSR July GCC PRs 50DR+

The interim arrangement in between the US and Iran is a substantial action towards reaching a full-blown offer. A full go back to normality in the Strait of Hormuz will likely require time, but the threat of a recession-inducing oil cost spike has actually decreased. Worldwide GDP is expected to grow by 2.4% this year, 0.2 ppt less than we predicted 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 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 local shipping, war-driven infrastructure damage and tourist losses.

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

The economic damage sustained in the last couple of months is substantial. Saudi GDP data for Q1 revealed development slowed to 3% y/y, with non-oil activities expanding by 2.9%, the weakest speed 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 disruption struck late in the quarter.

Driving Industrial Success through Strategic Diversification

Aside from Oman, all GCC manufacturers in addition to Iran and Iraq have suffered extensive oil and gas production losses considering that the start of the conflict. Might information reveal local production almost 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 helped prevent an even larger plunge in output.

ANSR July GCC PRs 50DR+

We anticipate GCC oil sector output to contract by 14.5% this year, which will mark the steepest decrease in several decades. We then anticipate a 23.5% rebound next year, driven mainly by normalisation from a badly depressed base. On the other hand, oil prices have actually been unpredictable, relieving below $85 per barrel as the interim contract was revealed.

In the medium term, we anticipate oil rates to be slightly lower than our pre-war baseline, as the UAE's departure from OPEC+ permits for a progressive boost in its output towards the 5mn barrel daily production target when trade normalises. Versus this background, the UAE will accelerate the building and construction of a new West-East pipeline that need to double the capacity of export through Fujairah.

The May PMI surveys reported output growth reaching its strongest level in three months, driven largely by enhanced domestic need. They stay below long-run averages, with weak export orders and cost pressures from higher product and transport costs are a typical style. Overall, we anticipate a 1.1% contraction in GCC non-energy sectors this year (compared to 4.2% development pre-war) and a progressive healing over the remainder of the decade.