Middle East Equity Trading Patterns in 2026

Risks are slanted 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 fiscal pressures, and displacement. "The current crisis is a stark suggestion of the work ahead for the area: not just to weather shocks, however to rebuild more resistant economies with more powerful macroeconomic basics, innovate and enhance governance, buy infrastructure, and increase employment-creating sectors," stated.

With peace and the ideal action, countries can develop the institutions, abilities and competitive sectors that produce opportunities for people." With this long-term vision in mind, the report takes a close take a look at the region's capacity for industrial policy federal government actions to increase strategic business activity as a motorist of economic development and task creation.

ANSR July GCC PRs 50DR+

Governments in the area have actually embraced commercial policy at a high rate in the last decade, often through sovereign wealth funds and state-owned enterprises, but the outcomes have been blended. The report highlights the crucial need for strong organizations and careful targeting of policies. "As nations face the heavy toll of the present dispute, it is necessary to likewise not forget the work needed for long-lasting peace and prosperity," said.

How Economic Shifts Can Shape GCC Markets

Q2 2026: The ICAEW Economic Update Middle East, is a quarterly financial projection for the region prepared straight for the financing profession. The GCC economy faces a significant contraction this year pending details of the US-Iran agreement to end the war. We expect energy flows, tourism and financier sentiment to slowly normalise as war interruptions diminish.

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 complete go back to normality in the Strait of Hormuz will likely take time, but the danger of a recession-inducing oil price spike has actually declined. International GDP is anticipated to grow by 2.4% this year, 0.2 ppt less than we predicted three months back, 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 decline 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 disturbance to regional shipping, war-driven infrastructure damage and tourist 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 projected previously. We expect Oman and Saudi Arabia to be the least adversely impacted by the fallout from the conflict, with both economies continuing to broaden this year.

The financial damage sustained in the last couple of 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 rate since 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 disruption struck late in the quarter.

Global Investment Opportunities across the GCC

Aside from Oman, all GCC manufacturers along with Iran and Iraq have suffered substantial oil and gas production losses given that the start of the conflict. Might data show local production almost halved 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 actually assisted prevent an even bigger plunge in output.

ANSR July GCC PRs 50DR+

Nevertheless, we forecast GCC oil sector output to agreement by 14.5% this year, which will mark the steepest decrease in several decades. We then expect a 23.5% rebound next year, driven mostly by normalisation from a severely depressed base. Oil costs have actually been volatile, reducing below $85 per barrel as the interim contract was revealed.

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

The May PMI surveys reported output development reaching its strongest level in 3 months, driven largely by improved domestic need. They remain below long-run averages, with weak export orders and cost pressures from higher material and transportation costs are a typical style. Overall, we expect 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.