Essential Stock Market Insights for GCC Growth

Risks are tilted to the downside. In case of an extended dispute, the current influence on the area will be compoundedthrough raised energy and food prices, declining trade, tourist and remittances, increased financial pressures, and displacement. "The present crisis is a stark pointer of the work ahead for the area: not just to weather shocks, but to rebuild more durable economies with stronger macroeconomic principles, innovate and enhance governance, buy infrastructure, and enhance employment-creating sectors," said.

With peace and the ideal action, nations can build the organizations, abilities and competitive sectors that produce chances for people." With this long-term vision in mind, the report takes a close appearance at the region's capacity for industrial policy federal government actions to increase strategic organization activity as a motorist of economic development and task production.

ANSR July GCC PRs 50DR+

Federal governments in the area have actually embraced commercial policy at a high rate in the last decade, often through sovereign wealth funds and state-owned business, however the outcomes have been mixed. The report highlights the vital requirement for strong organizations and cautious targeting of policies. "As countries deal with the heavy toll of the present dispute, it is very important to likewise not lose sight of the work needed for lasting peace and success," said.

Global Investment Opportunities within the GCC

Q2 2026: The ICAEW Economic Update Middle East, is a quarterly financial forecast for the region prepared straight for the finance occupation. The GCC economy deals with a significant contraction this year pending details of the US-Iran agreement to end the war. We expect energy flows, tourism and financier sentiment to slowly normalise as war disruptions decrease.

ANSR July GCC PRs 50DR+

The interim contract in between the United States and Iran is a substantial step towards reaching a full-blown offer. A full go back to normality in the Strait of Hormuz will likely require time, but the danger of a recession-inducing oil cost spike has actually declined. Worldwide GDP is anticipated to grow by 2.4% this year, 0.2 ppt less than we forecasted 3 months back, and 3.1% in 2027.

We forecast a 4.1% contraction in Middle East GDP this year (versus forecasted 3.6% expansion before the war), greater 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 disruption to local shipping, war-driven facilities damage and tourism losses.

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

The economic damage incurred 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 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 disruption hit late in the quarter.

Strategic Economic Diversification in the Future

Aside from Oman, all GCC producers in addition to Iran and Iraq have suffered extensive oil and gas production losses since the start of the dispute. Might information show local production nearly halved 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 actually helped avoid an even larger plunge in output.

ANSR July GCC PRs 50DR+

We forecast GCC oil sector output to agreement by 14.5% this year, which will mark the steepest decline in a number of decades. We then anticipate a 23.5% rebound next year, driven mainly by normalisation from a severely depressed base. Meanwhile, oil rates have actually been unpredictable, reducing listed below $85 per barrel as the interim arrangement was announced.

In the medium term, we anticipate oil costs to be somewhat lower than our pre-war baseline, as the UAE's departure from OPEC+ enables for a gradual increase in its output towards the 5mn barrel each day production target as soon as trade normalises. Against this background, the UAE will speed up the construction of a brand-new West-East pipeline that must double the capacity of export through Fujairah.

The May PMI surveys reported output growth reaching its strongest level in 3 months, driven mostly by improved domestic demand. Nevertheless, they remain below long-run averages, with weak export orders and cost pressures from greater product and transportation costs are a typical style. 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 healing over the remainder of the decade.