Emerging Stock Market Patterns for 2026

Threats are slanted to the downside. In case of a prolonged dispute, the existing influence on the region will be compoundedthrough elevated energy and food costs, declining trade, tourism and remittances, increased financial pressures, and displacement. "The existing crisis is a plain pointer of the work ahead for the area: not just to weather shocks, however to restore more resistant economies with more powerful macroeconomic principles, innovate and enhance governance, purchase facilities, and improve employment-creating sectors," said.

With peace and the right action, countries can construct the organizations, abilities and competitive sectors that create opportunities for individuals." With this long-lasting vision in mind, the report takes a close take a look at the region's capacity for commercial policy government actions to increase strategic service activity as a motorist of financial growth and task development.

ANSR July GCC PRs 50DR+

Federal governments in the area have embraced industrial policy at a high rate in the last decade, often through sovereign wealth funds and state-owned business, however the results have been mixed. The report highlights the crucial requirement for strong organizations and careful targeting of policies. "As countries deal with the heavy toll of today dispute, it is very important to likewise not forget the work needed for lasting peace and success," stated.

2026 GCC Market Outlook

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 deals with a marked contraction this year pending information of the US-Iran contract to end the war. We anticipate energy circulations, tourism and investor belief to gradually normalise as war disturbances go away.

ANSR July GCC PRs 50DR+

The interim agreement in between the United States and Iran is a significant action towards reaching a full-blown offer. A full go back to normality in the Strait of Hormuz will likely take some time, but the threat of a recession-inducing oil cost spike has decreased. Worldwide GDP is expected to grow by 2.4% this year, 0.2 ppt less than we predicted three months ago, 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 first year of the Covid pandemic. Kuwait, Iran, Iraq and Qatar stand out as the hardest struck, owing to their failure to prevent the interruption to regional 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 predicted previously. We anticipate Oman and Saudi Arabia to be the least negatively impacted by the fallout from the conflict, with both economies continuing to broaden this year.

The financial damage sustained in the last few months is substantial. Saudi GDP information for Q1 revealed growth 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 hit late in the quarter.

Future Business Landscape in Arabia

Aside from Oman, all GCC manufacturers as well as Iran and Iraq have suffered extensive oil and gas production losses because the start of the conflict. Might information show regional 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 actually assisted avoid an even bigger plunge in output.

ANSR July GCC PRs 50DR+

We anticipate GCC oil sector output to agreement by 14.5% this year, which will mark the steepest decline in a number of decades. We then expect a 23.5% rebound next year, driven mostly by normalisation from a severely depressed base. Oil costs have actually been unpredictable, alleviating listed below $85 per barrel as the interim contract was announced.

In the medium term, we anticipate oil prices to be a little lower than our pre-war standard, as the UAE's departure from OPEC+ enables a steady boost in its output towards the 5mn barrel each day production target as soon as trade normalises. Against this backdrop, 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 greatest level in three months, driven largely by improved domestic need. However, they remain listed below long-run averages, with weak export orders and price pressures from higher product and transportation costs are a typical theme. Overall, 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 remainder of the decade.