Analyzing GCC Investment Resilience in 2026

Risks are tilted to the downside. In case of an extended conflict, the present effect on the region will be compoundedthrough raised energy and food costs, declining trade, tourism and remittances, increased fiscal pressures, and displacement. "The existing crisis is a stark pointer of the work ahead for the area: not just to weather shocks, but to rebuild more resilient economies with more powerful macroeconomic basics, innovate and improve governance, purchase facilities, and improve employment-creating sectors," stated.

With peace and the ideal action, nations can develop the institutions, abilities and competitive sectors that develop opportunities for individuals." With this long-term vision in mind, the report takes a close appearance at the area's potential for industrial policy federal government actions to increase tactical business activity as a chauffeur of economic development and job production.

ANSR July GCC PRs 50DR+

Governments in the region have actually adopted industrial policy at a high rate in the last decade, typically through sovereign wealth funds and state-owned business, but the outcomes have been mixed. The report highlights the critical requirement for strong organizations and mindful targeting of policies. "As countries deal with the heavy toll of today dispute, it is essential to also not forget the work needed for long-lasting peace and prosperity," said.

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Q2 2026: The ICAEW Economic Update Middle East, is a quarterly economic projection for the region prepared directly for the financing occupation. The GCC economy faces a significant contraction this year pending details of the US-Iran arrangement to end the war. We anticipate energy flows, tourism and financier sentiment to gradually normalise as war disturbances diminish.

ANSR July GCC PRs 50DR+

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

We forecast a 4.1% contraction in Middle East GDP this year (versus projected 3.6% expansion before the war), greater than the decrease 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 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 projection to contract by 2.4% compared to a 0.2% decline predicted previously. We expect Oman and Saudi Arabia to be the least adversely affected by the fallout from the dispute, with both economies continuing to broaden this year.

The economic damage incurred in the last few months is considerable. Saudi GDP information for Q1 revealed development slowed to 3% y/y, with non-oil activities broadening 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.

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Aside from Oman, all GCC producers as well as Iran and Iraq have suffered substantial oil and gas production losses considering that the start of the conflict. Might information reveal local production nearly halved from pre-war levels, with the decline 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+

We forecast GCC oil sector output to agreement by 14.5% this year, which will mark the steepest decrease in a number of decades. We then anticipate a 23.5% rebound next year, driven largely by normalisation from a seriously depressed base. On the other hand, oil prices have actually been unstable, reducing below $85 per barrel as the interim contract was announced.

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

The May PMI surveys reported output growth reaching its strongest level in 3 months, driven largely by enhanced domestic demand. They remain below long-run averages, with weak export orders and price pressures from higher material and transportation expenses are a common style. Overall, 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 years.