Top Foreign Investment Avenues in the GCC Market

Threats are tilted to the disadvantage. In case of a prolonged dispute, the current influence on the region will be compoundedthrough raised energy and food prices, decreasing trade, tourist and remittances, increased financial pressures, and displacement. "The current crisis is a stark reminder of the work ahead for the area: not just to weather shocks, however to rebuild more resilient economies with more powerful macroeconomic principles, innovate and enhance governance, purchase infrastructure, and enhance employment-creating sectors," stated.

With peace and the best action, nations can construct the institutions, capabilities and competitive sectors that produce opportunities for individuals." 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 tactical business activity as a driver of economic growth and job production.

ANSR July GCC PRs 50DR+

Governments in the area have actually embraced industrial policy at a high rate in the last decade, often through sovereign wealth funds and state-owned business, but the outcomes have actually been mixed. The report highlights the vital need for strong institutions and careful targeting of policies. "As nations face the heavy toll of today dispute, it is very important to likewise not forget the work needed for long-lasting peace and success," said.

How Economic Diversification Will Transform GCC Markets

Q2 2026: The ICAEW Economic Update Middle East, is a quarterly economic projection for the region prepared directly for the financing profession. The GCC economy deals with a marked contraction this year pending information of the US-Iran arrangement to end the war. We anticipate energy circulations, tourist and financier sentiment to gradually normalise as war disturbances go away.

ANSR July GCC PRs 50DR+

The interim agreement between the US and Iran is a considerable action towards reaching a full-blown offer. A complete go back to normality in the Strait of Hormuz will likely require time, but the threat of a recession-inducing oil price spike has decreased. Worldwide GDP is expected to grow by 2.4% this year, 0.2 ppt less than we projected 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 decrease in the first year of the Covid pandemic. Kuwait, Iran, Iraq and Qatar stick out as the hardest hit, owing to their failure to prevent the interruption to local shipping, war-driven facilities damage and tourist losses.

Our 2026 outlook for the GCC is weaker than 3 months back, with GDP forecast to agreement by 2.4% compared to a 0.2% decrease forecasted formerly. 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 economic damage incurred in the last couple of months is significant. Saudi GDP data for Q1 revealed development slowed to 3% y/y, with non-oil activities broadening by 2.9%, the weakest pace because 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.

The 2026 Business Landscape in the GCC

Aside from Oman, all GCC manufacturers in addition to Iran and Iraq have suffered substantial oil and gas production losses because the start of the conflict. May data 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 assisted prevent an even bigger plunge in output.

ANSR July GCC PRs 50DR+

However, we forecast GCC oil sector output to contract by 14.5% this year, which will mark the steepest decrease in numerous years. We then anticipate a 23.5% rebound next year, driven mainly by normalisation from a severely depressed base. On the other hand, oil costs have been volatile, easing below $85 per barrel as the interim arrangement was announced.

In the medium term, we expect oil prices to be a little lower than our pre-war baseline, as the UAE's departure from OPEC+ enables for a progressive increase in its output towards the 5mn barrel per day production target as soon as trade normalises. Against this backdrop, the UAE will speed up the building of a brand-new West-East pipeline that must double the capability of export through Fujairah.

The May PMI studies reported output development reaching its greatest level in 3 months, driven mostly by improved domestic need. They stay listed below long-run averages, with weak export orders and price pressures from higher product and transportation costs are a common theme. In general, we expect a 1.1% contraction in GCC non-energy sectors this year (compared to 4.2% development pre-war) and a gradual healing over the rest of the years.