Key Stock Market Insights for Regional Growth

Threats are tilted to the downside. In case of an extended conflict, the current impacts on the region will be compoundedthrough raised energy and food costs, decreasing trade, tourist and remittances, increased financial pressures, and displacement. "The existing crisis is a plain tip of the work ahead for the area: not just to weather shocks, but to restore more resilient economies with stronger macroeconomic principles, innovate and improve governance, buy facilities, and enhance employment-creating sectors," stated.

With peace and the ideal action, countries can construct the organizations, abilities and competitive sectors that create chances for individuals." With this long-term vision in mind, the report takes a close appearance at the region's potential for commercial policy government actions to increase tactical service activity as a motorist of economic growth and task creation.

ANSR July GCC PRs 50DR+

Federal governments in the area have adopted commercial policy at a high rate in the last years, frequently through sovereign wealth funds and state-owned business, but the outcomes have been blended. The report highlights the important need for strong institutions and careful targeting of policies. "As nations deal with the heavy toll of the present dispute, it is necessary to also not lose sight of the work needed for lasting peace and success," stated.

Foreign Capital Prospects across the GCC

Q2 2026: The ICAEW Economic Update Middle East, is a quarterly financial projection for the area prepared straight for the financing profession. The GCC economy deals with a significant contraction this year pending information of the US-Iran arrangement to end the war. We anticipate energy flows, tourist and investor sentiment to gradually normalise as war interruptions decrease.

ANSR July GCC PRs 50DR+

The interim agreement in between the US and Iran is a significant step towards reaching a full-blown offer. A full go back to normality in the Strait of Hormuz will likely take some time, but the danger of a recession-inducing oil cost spike has decreased. Worldwide GDP is expected to grow by 2.4% this year, 0.2 ppt less than we forecasted 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), higher than the decline in the first year of the Covid pandemic. Kuwait, Iran, Iraq and Qatar stand out as the hardest hit, owing to their inability to prevent the interruption to local shipping, war-driven facilities 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 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 financial damage incurred in the last few 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 given that the Covid pandemic. On a seasonally changed 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.

Evaluating GCC Investment Resilience in 2026

Aside from Oman, all GCC manufacturers as well as Iran and Iraq have suffered substantial oil and gas production losses since the start of the dispute. Might data reveal local 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 prevent an even larger plunge in output.

ANSR July GCC PRs 50DR+

However, we anticipate GCC oil sector output to agreement by 14.5% this year, which will mark the steepest decline in several years. We then anticipate a 23.5% rebound next year, driven mostly by normalisation from a severely depressed base. On the other hand, oil rates have actually been volatile, alleviating listed below $85 per barrel as the interim arrangement was announced.

In the medium term, we expect oil rates to be a little lower than our pre-war standard, as the UAE's departure from OPEC+ permits a progressive boost in its output towards the 5mn barrel per day production target when trade normalises. Against this background, the UAE will speed up the building 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 3 months, driven largely by enhanced domestic demand. However, they remain listed below long-run averages, with weak export orders and rate pressures from greater material and transportation costs are a common theme. Overall, we anticipate a 1.1% contraction in GCC non-energy sectors this year (compared to 4.2% development pre-war) and a progressive healing over the rest of the decade.