Essential Equity Capital Strategies for GCC Investors

Threats are slanted to the downside. In case of an extended dispute, the present impacts on the region will be compoundedthrough raised energy and food costs, declining trade, tourism and remittances, increased fiscal pressures, and displacement. "The current crisis is a plain tip of the work ahead for the region: not only to weather shocks, but to reconstruct more resilient economies with more powerful macroeconomic basics, innovate and improve governance, purchase infrastructure, and improve employment-creating sectors," stated.

With peace and the ideal action, countries can develop the institutions, abilities and competitive sectors that develop chances for people." With this long-lasting vision in mind, the report takes a close take a look at the region's potential for commercial policy government actions to increase strategic business activity as a driver of economic development and job development.

ANSR July GCC PRs 50DR+

Federal governments in the region have embraced industrial policy at a high rate in the last decade, frequently through sovereign wealth funds and state-owned business, however the results have been blended. The report highlights the crucial requirement for strong institutions and careful targeting of policies. "As countries face the heavy toll of the present dispute, it is essential to likewise not lose sight of the work needed for lasting peace and success," said.

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Q2 2026: The ICAEW Economic Update Middle East, is a quarterly financial forecast 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 expect energy flows, tourism and financier sentiment to gradually normalise as war interruptions diminish.

ANSR July GCC PRs 50DR+

The interim contract between the US and Iran is a substantial action towards reaching a full-blown deal. A complete return to normality in the Strait of Hormuz will likely take time, but the threat of a recession-inducing oil rate spike has decreased. International GDP is anticipated to grow by 2.4% this year, 0.2 ppt less than we projected three months earlier, and 3.1% in 2027.

We anticipate a 4.1% contraction in Middle East GDP this year (versus projected 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 inability to avoid the disturbance to regional shipping, war-driven infrastructure damage and tourism losses.

Our 2026 outlook for the GCC is weaker than 3 months back, with GDP projection to agreement by 2.4% compared to a 0.2% decline predicted formerly. We expect Oman and Saudi Arabia to be the least adversely 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 information for Q1 revealed growth slowed to 3% y/y, with non-oil activities expanding by 2.9%, the weakest speed given 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 disruption hit late in the quarter.

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Aside from Oman, all GCC manufacturers in addition to Iran and Iraq have actually suffered substantial oil and gas production losses considering that the start of the conflict. Might information show regional production nearly cut in half from pre-war levels, with the decline 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 prevent an even bigger plunge in output.

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Nevertheless, we forecast GCC oil sector output to agreement by 14.5% this year, which will mark the steepest decline in several decades. We then expect a 23.5% rebound next year, driven largely by normalisation from a significantly depressed base. On the other hand, oil costs have actually been unpredictable, easing listed below $85 per barrel as the interim contract was revealed.

In the medium term, we anticipate oil prices to be slightly 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 daily production target once trade normalises. Versus this background, the UAE will speed up the construction of a new West-East pipeline that should double the capacity of export through Fujairah.

The May PMI studies reported output development reaching its strongest level in 3 months, driven largely by enhanced domestic need. They stay below long-run averages, with weak export orders and cost pressures from greater material and transportation expenses are a common theme. In general, 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 decade.