Evaluating GCC Investment Resilience for 2026

Dangers are slanted to the downside. In the occasion of an extended conflict, the current influence on the region will be compoundedthrough raised energy and food rates, declining trade, tourism and remittances, increased fiscal pressures, and displacement. "The existing crisis is a plain tip of the work ahead for the region: not just to weather shocks, but to restore more resistant economies with more powerful macroeconomic basics, innovate and improve governance, buy infrastructure, and improve employment-creating sectors," stated.

With peace and the right action, countries can develop the institutions, capabilities and competitive sectors that develop chances for individuals." With this long-lasting vision in mind, the report takes a close look at the region's capacity for commercial policy federal government actions to increase strategic organization activity as a driver of financial growth and job development.

ANSR July GCC PRs 50DR+

Federal governments in the region have actually adopted industrial policy at a high rate in the last decade, frequently through sovereign wealth funds and state-owned business, but the outcomes have been blended. The report highlights the crucial requirement for strong organizations and careful targeting of policies. "As nations deal with the heavy toll of today conflict, it is very important to likewise not lose sight of the work required for lasting peace and prosperity," said.

Key Stock Capital Insights for GCC Growth

Q2 2026: The ICAEW Economic Update Middle East, is a quarterly economic forecast for the region prepared directly for the finance occupation. The GCC economy deals with a marked contraction this year pending information of the US-Iran agreement to end the war. We anticipate energy circulations, tourist and investor sentiment to slowly normalise as war disruptions go away.

ANSR July GCC PRs 50DR+

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

We anticipate a 4.1% contraction in Middle East GDP this year (versus forecasted 3.6% expansion before the war), greater 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 avoid the interruption to local shipping, war-driven infrastructure 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% decrease forecasted previously. We anticipate 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 financial damage incurred in the last couple of months is substantial. Saudi GDP information for Q1 revealed growth slowed to 3% y/y, with non-oil activities broadening by 2.9%, the weakest pace 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 interruption struck late in the quarter.

Accelerating Economic Growth via Strategic Diversification

Aside from Oman, all GCC manufacturers in addition to Iran and Iraq have actually suffered substantial oil and gas production losses considering that the start of the dispute. May data reveal local production nearly 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 prevent an even larger plunge in output.

ANSR July GCC PRs 50DR+

Nevertheless, 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 mainly by normalisation from a severely depressed base. Oil prices have been unstable, reducing listed below $85 per barrel as the interim contract was announced.

In the medium term, we anticipate oil rates to be a little lower than our pre-war baseline, as the UAE's departure from OPEC+ enables a progressive boost in its output towards the 5mn barrel daily production target as soon as trade normalises. Against this backdrop, the UAE will accelerate the building of a brand-new West-East pipeline that should double the capacity of export through Fujairah.

The May PMI studies reported output growth reaching its strongest level in three months, driven mainly by improved domestic demand. Nevertheless, they remain listed below long-run averages, with weak export orders and rate pressures from higher product and transportation expenses are a common style. Overall, we anticipate a 1.1% contraction in GCC non-energy sectors this year (compared to 4.2% growth pre-war) and a steady healing over the remainder of the decade.