Key Foreign Investment Avenues for the GCC Region

Dangers are tilted to the disadvantage. In case of a prolonged conflict, the current effects on the region will be compoundedthrough raised energy and food costs, decreasing trade, tourist and remittances, increased financial pressures, and displacement. "The present crisis is a plain suggestion of the work ahead for the region: not only to weather shocks, but to rebuild more durable economies with more powerful macroeconomic basics, innovate and enhance governance, purchase infrastructure, and boost employment-creating sectors," said.

With peace and the right action, countries can develop the institutions, capabilities and competitive sectors that produce opportunities for individuals." With this long-lasting vision in mind, the report takes a close take a look at the region's potential for commercial policy federal government actions to increase tactical company activity as a motorist of economic development and job development.

ANSR July GCC PRs 50DR+

Federal governments in the region have actually adopted commercial policy at a high rate in the last decade, often through sovereign wealth funds and state-owned enterprises, but the outcomes have actually been mixed. The report highlights the important need for strong organizations and careful targeting of policies. "As countries deal with the heavy toll of the present conflict, it is very important to also not forget the work needed for lasting peace and success," said.

GCC Equity Market Trends for 2026

Q2 2026: The ICAEW Economic Update Middle East, is a quarterly financial forecast for the area prepared straight for the finance profession. The GCC economy deals with a significant contraction this year pending details of the US-Iran arrangement to end the war. We expect energy circulations, tourism and investor belief to slowly normalise as war interruptions diminish.

ANSR July GCC PRs 50DR+

The interim arrangement in between the US and Iran is a substantial action towards reaching a full-blown offer. A full return to normality in the Strait of Hormuz will likely require time, however the danger of a recession-inducing oil cost spike has declined. Global GDP is expected to grow by 2.4% this year, 0.2 ppt less than we forecasted three months earlier, and 3.1% in 2027.

We forecast a 4.1% contraction in Middle East GDP this year (versus predicted 3.6% growth before the war), greater than the decline in the very first year of the Covid pandemic. Kuwait, Iran, Iraq and Qatar stand apart as the hardest struck, owing to their failure to prevent the interruption to local shipping, war-driven infrastructure damage and tourism 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 predicted formerly. 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 sustained in the last few months is substantial. Saudi GDP information for Q1 showed development slowed to 3% y/y, with non-oil activities expanding by 2.9%, the weakest speed 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 Success through Strategic Diversification

Aside from Oman, all GCC producers along with Iran and Iraq have suffered extensive oil and gas production losses given that the start of the dispute. Might data 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 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 decrease in numerous decades. We then anticipate a 23.5% rebound next year, driven mainly by normalisation from a seriously depressed base. Meanwhile, oil rates have actually been unpredictable, alleviating below $85 per barrel as the interim arrangement was announced.

In the medium term, we anticipate oil prices to be somewhat lower than our pre-war standard, as the UAE's departure from OPEC+ allows for a steady increase in its output towards the 5mn barrel per day production target once trade normalises. Against this background, the UAE will accelerate the building and construction of a brand-new West-East pipeline that should double the capability of export through Fujairah.

The May PMI surveys reported output development reaching its strongest level in 3 months, driven mostly by improved domestic demand. They stay listed below long-run averages, with weak export orders and cost pressures from higher material and transportation costs are a common theme. In general, we anticipate a 1.1% contraction in GCC non-energy sectors this year (compared to 4.2% development pre-war) and a gradual recovery over the remainder of the decade.