Assessing Regional Investment Resilience for 2026

Dangers are slanted to the drawback. In case of a prolonged dispute, the present influence on the region will be compoundedthrough elevated energy and food costs, declining trade, tourism and remittances, increased fiscal pressures, and displacement. "The existing crisis is a stark tip of the work ahead for the area: not only to weather shocks, however to reconstruct more resilient economies with more powerful macroeconomic basics, innovate and improve governance, invest in facilities, and enhance employment-creating sectors," said.

With peace and the right action, countries can build the organizations, capabilities and competitive sectors that produce chances for individuals." With this long-term vision in mind, the report takes a close appearance at the region's capacity for industrial policy government actions to increase strategic company activity as a driver of financial development and task development.

ANSR July GCC PRs 50DR+

Federal governments in the region have actually embraced commercial policy at a high rate in the last years, often through sovereign wealth funds and state-owned business, however the outcomes have been blended. The report highlights the vital requirement for strong institutions and careful targeting of policies. "As nations face the heavy toll of today conflict, it is very important to also not lose sight of the work required for lasting peace and prosperity," stated.

Advancing Industrial Growth through Strategic Diversification

Q2 2026: The ICAEW Economic Update Middle East, is a quarterly financial forecast for the region prepared straight for the finance profession. The GCC economy faces a significant contraction this year pending information of the US-Iran contract to end the war. We anticipate energy flows, tourist and financier sentiment to gradually normalise as war disruptions subside.

ANSR July GCC PRs 50DR+

The interim arrangement 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 risk of a recession-inducing oil rate spike has actually declined. International GDP is anticipated 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 forecasted 3.6% growth 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 hit, owing to their inability to avoid the disruption to local shipping, war-driven infrastructure damage and tourism losses.

Our 2026 outlook for the GCC is weaker than three months ago, with GDP forecast to agreement by 2.4% compared to a 0.2% decline projected previously. We anticipate Oman and Saudi Arabia to be the least negatively affected by the fallout from the conflict, with both economies continuing to expand this year.

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

Essential Equity Capital Strategies for GCC Investors

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

ANSR July GCC PRs 50DR+

Nevertheless, we anticipate GCC oil sector output to agreement by 14.5% this year, which will mark the steepest decrease in several years. We then expect a 23.5% rebound next year, driven mostly by normalisation from a badly depressed base. 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 prices to be somewhat 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 once trade normalises. Against this background, the UAE will accelerate the building and construction of a brand-new West-East pipeline that need to double the capability of export through Fujairah.

The May PMI studies reported output growth reaching its greatest level in 3 months, driven largely by enhanced domestic need. Nevertheless, they stay listed below long-run averages, with weak export orders and price pressures from greater material and transport expenses are a common theme. In general, we expect a 1.1% contraction in GCC non-energy sectors this year (compared to 4.2% growth pre-war) and a steady recovery over the rest of the decade.