Future Investment Landscape in the GCC

Dangers are slanted to the drawback. In the event of a prolonged dispute, the existing effect on the area will be compoundedthrough raised energy and food rates, decreasing trade, tourism and remittances, increased financial pressures, and displacement. "The present crisis is a stark suggestion of the work ahead for the region: not only to weather shocks, however to restore more resistant economies with more powerful macroeconomic principles, innovate and enhance governance, invest in infrastructure, and increase employment-creating sectors," stated.

With peace and the right action, countries can build the organizations, abilities and competitive sectors that develop opportunities for individuals." With this long-term vision in mind, the report takes a close look at the region's potential for commercial policy government actions to increase strategic business activity as a motorist of financial growth and job development.

ANSR July GCC PRs 50DR+

Federal governments in the area have actually adopted industrial policy at a high rate in the last decade, often through sovereign wealth funds and state-owned business, but the results have been blended. The report highlights the critical requirement for strong organizations and cautious targeting of policies. "As countries face the heavy toll of the present dispute, it is very important to likewise not lose sight of the work needed for long-lasting peace and success," stated.

Securing Middle East Portfolios for 2026 Shifts

Q2 2026: The ICAEW Economic Update Middle East, is a quarterly economic projection for the region prepared directly for the financing profession. The GCC economy faces a marked contraction this year pending information of the US-Iran contract to end the war. We anticipate energy flows, tourist and financier sentiment to slowly normalise as war disturbances subside.

ANSR July GCC PRs 50DR+

The interim contract in between the US and Iran is a substantial action towards reaching a full-blown deal. A full return to normality in the Strait of Hormuz will likely take some time, however the threat of a recession-inducing oil cost spike has decreased. International GDP is anticipated to grow by 2.4% this year, 0.2 ppt less than we projected 3 months back, and 3.1% in 2027.

We forecast a 4.1% contraction in Middle East GDP this year (versus projected 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 inability to prevent the interruption to local shipping, war-driven facilities damage and tourist losses.

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

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

How Economic Shifts Will Transform GCC Markets

Aside from Oman, all GCC manufacturers in addition to Iran and Iraq have suffered comprehensive oil and gas production losses considering that the start of the conflict. Might data show local production almost 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 actually assisted avoid an even bigger plunge in output.

ANSR July GCC PRs 50DR+

Nonetheless, 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 anticipate a 23.5% rebound next year, driven mainly by normalisation from a significantly depressed base. Oil rates have been volatile, easing below $85 per barrel as the interim agreement 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+ permits a progressive boost in its output towards the 5mn barrel daily production target once trade normalises. Versus this backdrop, the UAE will speed up the building of a new West-East pipeline that need to double the capacity of export through Fujairah.

The May PMI surveys reported output development reaching its greatest level in 3 months, driven mainly by enhanced domestic need. Nevertheless, they remain below long-run averages, with weak export orders and rate pressures from greater material and transportation expenses are a common theme. Overall, we expect a 1.1% contraction in GCC non-energy sectors this year (compared to 4.2% growth pre-war) and a progressive recovery over the remainder of the decade.