Key Stock Capital Strategies for Regional Investors

Threats are tilted to the disadvantage. In the event of an extended conflict, the present impacts on the region will be compoundedthrough raised energy and food costs, declining trade, tourist and remittances, increased fiscal pressures, and displacement. "The current crisis is a stark suggestion of the work ahead for the region: not just to weather shocks, but to rebuild more resistant economies with more powerful macroeconomic fundamentals, innovate and improve governance, invest in infrastructure, and enhance employment-creating sectors," stated.

With peace and the ideal action, countries can construct the organizations, abilities and competitive sectors that produce opportunities for individuals." With this long-lasting vision in mind, the report takes a close look at the region's potential for commercial policy government actions to increase tactical business activity as a driver of economic development and task production.

ANSR July GCC PRs 50DR+

Governments in the area have adopted commercial policy at a high rate in the last years, typically through sovereign wealth funds and state-owned business, but the results have actually been blended. The report highlights the critical requirement for strong organizations and cautious targeting of policies. "As countries face the heavy toll of the present dispute, it is essential to likewise not lose sight of the work required for long-lasting peace and prosperity," stated.

Essential Industrial Diversification in the Future

Q2 2026: The ICAEW Economic Update Middle East, is a quarterly financial forecast for the area prepared directly for the financing profession. The GCC economy faces a marked contraction this year pending details of the US-Iran arrangement to end the war. We anticipate energy circulations, tourist and financier belief to gradually normalise as war interruptions decrease.

ANSR July GCC PRs 50DR+

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

We forecast a 4.1% contraction in Middle East GDP this year (versus predicted 3.6% expansion before the war), higher than the decline in the very first year of the Covid pandemic. Kuwait, Iran, Iraq and Qatar stand out as the hardest struck, owing to their inability to prevent the disruption to local shipping, war-driven facilities damage and tourism losses.

Our 2026 outlook for the GCC is weaker than three months ago, with GDP forecast to contract by 2.4% compared to a 0.2% decrease predicted previously. We anticipate Oman and Saudi Arabia to be the least negatively impacted by the fallout from the conflict, with both economies continuing to broaden this year.

The financial damage incurred in the last couple of months is significant. Saudi GDP information for Q1 revealed growth slowed to 3% y/y, with non-oil activities broadening by 2.9%, the weakest speed 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 interruption hit late in the quarter.

International Capital Opportunities within the GCC

Aside from Oman, all GCC manufacturers as well as Iran and Iraq have actually suffered extensive oil and gas production losses given that the start of the dispute. May information show regional production almost 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 helped avoid an even bigger plunge in output.

ANSR July GCC PRs 50DR+

We anticipate GCC oil sector output to contract by 14.5% this year, which will mark the steepest decrease in several decades. We then expect a 23.5% rebound next year, driven largely by normalisation from a badly depressed base. Oil prices have actually been unstable, relieving listed below $85 per barrel as the interim agreement was revealed.

In the medium term, we expect oil prices to be somewhat lower than our pre-war baseline, as the UAE's departure from OPEC+ enables a steady increase in its output towards the 5mn barrel each day production target when trade normalises. Versus this backdrop, the UAE will accelerate the building and construction of a new West-East pipeline that ought to double the capacity of export through Fujairah.

The May PMI studies reported output growth reaching its strongest level in three months, driven mainly by enhanced domestic demand. They stay listed below long-run averages, with weak export orders and cost pressures from greater material and transportation expenses are a common theme. Overall, we anticipate a 1.1% contraction in GCC non-energy sectors this year (compared to 4.2% growth pre-war) and a gradual healing over the remainder of the decade.