Global Capital Opportunities within the GCC

Dangers are tilted to the downside. In case of an extended conflict, the current influence on the region will be compoundedthrough raised energy and food rates, declining trade, tourism and remittances, increased financial pressures, and displacement. "The existing crisis is a stark pointer of the work ahead for the area: not just to weather shocks, however to reconstruct more resilient economies with stronger macroeconomic principles, innovate and enhance governance, invest in infrastructure, and improve employment-creating sectors," said.

With peace and the right action, nations can build the organizations, abilities and competitive sectors that develop chances for people." With this long-term vision in mind, the report takes a close take a look at the area's capacity for industrial policy federal government actions to increase strategic company activity as a driver of economic development and job creation.

ANSR July GCC PRs 50DR+

Federal governments in the area have adopted industrial policy at a high rate in the last decade, typically through sovereign wealth funds and state-owned enterprises, however the results have been mixed. The report highlights the important requirement for strong institutions and mindful targeting of policies. "As nations face the heavy toll of today conflict, it is essential to likewise not forget the work needed for long-lasting peace and success," said.

Key Stock Market Insights for GCC Investors

Q2 2026: The ICAEW Economic Update Middle East, is a quarterly economic forecast for the region prepared straight for the finance occupation. The GCC economy faces a marked contraction this year pending information of the US-Iran arrangement to end the war. We expect energy flows, tourist and investor belief to gradually normalise as war disruptions go away.

ANSR July GCC PRs 50DR+

The interim agreement between the United States and Iran is a considerable action towards reaching a full-blown offer. A complete return to normality in the Strait of Hormuz will likely require time, however the threat of a recession-inducing oil rate spike has declined. 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 predicted 3.6% growth 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 avoid the disruption to regional shipping, war-driven infrastructure damage and tourism losses.

Our 2026 outlook for the GCC is weaker than three months back, with GDP projection to agreement by 2.4% compared to a 0.2% decline predicted formerly. We anticipate 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 incurred in the last few months is substantial. Saudi GDP data for Q1 showed growth slowed to 3% y/y, with non-oil activities broadening by 2.9%, the weakest pace because 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.

Accelerating Economic Success via Strategic Diversification

Aside from Oman, all GCC producers as well as Iran and Iraq have actually suffered extensive oil and gas production losses since the start of the dispute. May data reveal local production almost 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 contract by 14.5% this year, which will mark the steepest decrease in a number of years. We then expect a 23.5% rebound next year, driven largely by normalisation from a severely depressed base. Meanwhile, oil costs have been unpredictable, alleviating listed below $85 per barrel as the interim agreement was revealed.

In the medium term, we expect oil costs to be a little lower than our pre-war baseline, as the UAE's departure from OPEC+ allows for a progressive boost in its output towards the 5mn barrel daily production target when trade normalises. Versus this background, the UAE will speed up the building and construction of a brand-new West-East pipeline that should double the capability of export through Fujairah.

The May PMI studies reported output development reaching its greatest level in three months, driven mostly by improved domestic demand. Nevertheless, they remain below long-run averages, with weak export orders and price pressures from greater material and transportation expenses are a typical style. Overall, we expect a 1.1% contraction in GCC non-energy sectors this year (compared to 4.2% development pre-war) and a steady recovery over the rest of the years.