Assessing GCC Market Potential for 2026

Risks are slanted to the drawback. In case of an extended conflict, the existing effect on the area will be compoundedthrough elevated energy and food rates, decreasing trade, tourism and remittances, increased financial pressures, and displacement. "The existing crisis is a plain suggestion of the work ahead for the area: not only to weather shocks, however to rebuild more resilient economies with stronger macroeconomic fundamentals, innovate and enhance governance, purchase facilities, and enhance employment-creating sectors," said.

With peace and the ideal action, nations can build the institutions, capabilities and competitive sectors that produce chances for individuals." With this long-lasting vision in mind, the report takes a close look at the area's capacity for industrial policy government actions to increase strategic organization activity as a chauffeur of financial growth and job production.

ANSR July GCC PRs 50DR+

Governments in the region have embraced commercial policy at a high rate in the last years, typically through sovereign wealth funds and state-owned business, however the outcomes have been blended. The report highlights the crucial need for strong institutions and careful targeting of policies. "As countries deal with the heavy toll of the present dispute, it is essential to likewise not forget the work required for lasting peace and success," stated.

How Economic Diversification Will Transform Arabian Markets

Q2 2026: The ICAEW Economic Update Middle East, is a quarterly economic projection for the region prepared directly for the financing profession. The GCC economy faces a marked contraction this year pending details of the US-Iran agreement to end the war. We anticipate energy flows, tourist and financier sentiment to gradually normalise as war interruptions go away.

ANSR July GCC PRs 50DR+

The interim arrangement in between the US and Iran is a substantial step towards reaching a full-blown deal. A complete go back to normality in the Strait of Hormuz will likely take time, however the danger of a recession-inducing oil rate spike has actually decreased. International GDP is expected to grow by 2.4% this year, 0.2 ppt less than we forecasted 3 months earlier, 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), higher than the decrease in the first year of the Covid pandemic. Kuwait, Iran, Iraq and Qatar stand out as the hardest struck, owing to their failure to prevent 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 projection to contract by 2.4% compared to a 0.2% decrease forecasted formerly. We expect Oman and Saudi Arabia to be the least adversely affected by the fallout from the dispute, with both economies continuing to broaden this year.

The economic damage sustained in the last few months is significant. Saudi GDP information for Q1 revealed growth slowed to 3% y/y, with non-oil activities broadening by 2.9%, the weakest rate since 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.

Emerging Stock Trading Patterns in 2026

Aside from Oman, all GCC manufacturers along with Iran and Iraq have suffered comprehensive oil and gas production losses since the start of the conflict. May information show local production almost 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 avoid 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 several years. We then anticipate a 23.5% rebound next year, driven mostly by normalisation from a significantly depressed base. On the other hand, oil costs have been volatile, reducing listed below $85 per barrel as the interim agreement was revealed.

In the medium term, we expect oil prices to be slightly lower than our pre-war baseline, as the UAE's departure from OPEC+ allows for a steady increase in its output towards the 5mn barrel per day production target as soon as trade normalises. Versus this background, the UAE will speed up the construction of a new West-East pipeline that ought to double the capacity of export through Fujairah.

The May PMI surveys reported output development reaching its strongest level in 3 months, driven largely by enhanced domestic demand. They remain below long-run averages, with weak export orders and rate pressures from greater material and transport expenses are a typical style. In general, we expect a 1.1% contraction in GCC non-energy sectors this year (compared to 4.2% growth pre-war) and a gradual recovery over the rest of the years.