Assessing GCC Investment Potential for 2026

Dangers are tilted to the disadvantage. In the event of an extended dispute, the current effect on the region will be compoundedthrough elevated energy and food costs, declining trade, tourist and remittances, increased financial pressures, and displacement. "The current crisis is a plain reminder of the work ahead for the area: not just to weather shocks, however to restore more durable economies with stronger macroeconomic fundamentals, innovate and enhance governance, invest in facilities, and improve 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-lasting vision in mind, the report takes a close take a look at the region's potential for commercial policy federal government actions to increase strategic company activity as a chauffeur of financial growth and task production.

ANSR July GCC PRs 50DR+

Governments in the area have adopted industrial 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 critical need for strong organizations and cautious targeting of policies. "As nations face the heavy toll of the present dispute, it is necessary to likewise not forget the work required for long-lasting peace and prosperity," said.

Key Equity Market Insights for Regional Growth

Q2 2026: The ICAEW Economic Update Middle East, is a quarterly economic forecast for the region prepared straight for the financing profession. The GCC economy faces a significant contraction this year pending information of the US-Iran contract to end the war. We expect energy circulations, tourism and financier belief to slowly normalise as war disturbances subside.

ANSR July GCC PRs 50DR+

The interim contract between the United States 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 take some time, however the risk of a recession-inducing oil rate spike has actually declined. Worldwide GDP is expected to grow by 2.4% this year, 0.2 ppt less than we projected 3 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 decrease in the first year of the Covid pandemic. Kuwait, Iran, Iraq and Qatar stick out as the hardest struck, owing to their failure to avoid the interruption to local shipping, war-driven facilities damage and tourism losses.

Our 2026 outlook for the GCC is weaker than 3 months earlier, with GDP forecast to agreement by 2.4% compared to a 0.2% decline forecasted formerly. We anticipate Oman and Saudi Arabia to be the least negatively impacted by the fallout from the dispute, with both economies continuing to broaden this year.

The economic damage incurred in the last couple of months is considerable. Saudi GDP data for Q1 revealed growth slowed to 3% y/y, with non-oil activities broadening by 2.9%, the weakest rate 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 disturbance struck late in the quarter.

Key Foreign Investment Prospects for the GCC Market

Aside from Oman, all GCC manufacturers as well as Iran and Iraq have suffered comprehensive oil and gas production losses since the start of the conflict. May information reveal regional production almost cut in half from pre-war levels, with the decrease deepening relative to March and April. Rerouting efforts, including 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+

Nevertheless, we forecast GCC oil sector output to agreement by 14.5% this year, which will mark the steepest decrease in several years. We then anticipate a 23.5% rebound next year, driven largely by normalisation from a badly depressed base. Oil prices have been volatile, easing listed below $85 per barrel as the interim agreement was announced.

In the medium term, we expect oil costs to be slightly lower than our pre-war standard, as the UAE's departure from OPEC+ enables a gradual boost in its output towards the 5mn barrel per day production target when trade normalises. Against this backdrop, the UAE will speed up the building and construction of a new West-East pipeline that need 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 need. Nevertheless, they stay below long-run averages, with weak export orders and rate pressures from greater product and transport 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 rest of the years.