Critical Stock Capital Insights for Regional Investors

Risks are slanted to the downside. In case of a prolonged dispute, the current effects on the region will be compoundedthrough raised energy and food rates, declining trade, tourism and remittances, increased financial pressures, and displacement. "The current crisis is a plain tip of the work ahead for the area: not only to weather shocks, however to restore more resilient economies with more powerful macroeconomic principles, innovate and improve governance, purchase facilities, and improve employment-creating sectors," stated.

With peace and the ideal action, countries can construct the organizations, abilities and competitive sectors that develop chances for people." With this long-term vision in mind, the report takes a close look at the region's potential for industrial policy government actions to increase tactical company activity as a motorist of economic growth and job development.

ANSR July GCC PRs 50DR+

Governments in the region have adopted commercial policy at a high rate in the last decade, typically through sovereign wealth funds and state-owned business, however the outcomes have been mixed. The report highlights the crucial requirement for strong institutions and careful targeting of policies. "As nations face the heavy toll of the present conflict, it is important to also not forget the work required for long-lasting peace and prosperity," said.

Emerging Equity Trading Patterns for 2026

Q2 2026: The ICAEW Economic Update Middle East, is a quarterly economic projection for the region prepared directly for the finance occupation. The GCC economy deals with a marked contraction this year pending details of the US-Iran arrangement to end the war. We anticipate energy flows, tourism and investor belief to slowly normalise as war disturbances subside.

ANSR July GCC PRs 50DR+

The interim contract in between the United States and Iran is a considerable action towards reaching a full-blown offer. A full return to normality in the Strait of Hormuz will likely require time, but the danger of a recession-inducing oil price spike has actually declined. Worldwide 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 anticipate a 4.1% contraction in Middle East GDP this year (versus projected 3.6% expansion before the war), higher than the decrease in the very first year of the Covid pandemic. Kuwait, Iran, Iraq and Qatar stand out as the hardest struck, owing to their failure to prevent the interruption to regional shipping, war-driven infrastructure damage and tourist losses.

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

The economic damage incurred in the last few months is considerable. Saudi GDP data for Q1 showed development slowed to 3% y/y, with non-oil activities expanding by 2.9%, the weakest pace 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 interruption struck late in the quarter.

Why Industrial Diversification Will Transform GCC Markets

Aside from Oman, all GCC manufacturers as well as Iran and Iraq have actually suffered extensive oil and gas production losses because the start of the dispute. Might information show local production nearly 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 assisted avoid an even larger 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 expect a 23.5% rebound next year, driven mostly by normalisation from a severely depressed base. Oil rates have been volatile, relieving below $85 per barrel as the interim agreement was revealed.

In the medium term, we anticipate oil costs to be somewhat lower than our pre-war standard, as the UAE's departure from OPEC+ enables a progressive boost in its output towards the 5mn barrel each day production target once trade normalises. Versus this backdrop, the UAE will speed up 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 mainly by improved domestic need. Nevertheless, they stay listed below long-run averages, with weak export orders and cost pressures from higher material and transportation costs are a typical theme. 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 rest of the years.