The 2026 Investment Landscape in the GCC

Threats are tilted to the disadvantage. In case of an extended dispute, the present effect on the area will be compoundedthrough raised energy and food rates, declining trade, tourist and remittances, increased financial pressures, and displacement. "The current crisis is a stark reminder of the work ahead for the area: not just to weather shocks, but to reconstruct more durable economies with stronger macroeconomic principles, innovate and improve governance, invest in infrastructure, and increase employment-creating sectors," said.

With peace and the right action, countries can develop the institutions, abilities and competitive sectors that create chances for individuals." With this long-term vision in mind, the report takes a close take a look at the region's capacity for industrial policy government actions to increase tactical service activity as a chauffeur of economic growth and job production.

ANSR July GCC PRs 50DR+

Federal governments in the region have actually embraced commercial policy at a high rate in the last decade, often through sovereign wealth funds and state-owned enterprises, but the outcomes have actually been mixed. The report highlights the critical need for strong organizations and cautious targeting of policies. "As nations deal with the heavy toll of the present dispute, it is necessary to also not lose sight of the work required for lasting peace and success," said.

Optimizing Investment Strategies for a 2026 Economy

Q2 2026: The ICAEW Economic Update Middle East, is a quarterly financial projection for the area prepared straight for the finance occupation. The GCC economy faces a significant contraction this year pending information of the US-Iran contract to end the war. We anticipate energy circulations, tourist and financier belief to gradually normalise as war interruptions go away.

ANSR July GCC PRs 50DR+

The interim contract between the United States 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 danger of a recession-inducing oil cost spike has actually decreased. Global GDP is anticipated 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 projected 3.6% expansion 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 prevent the disturbance to local shipping, war-driven infrastructure damage and tourism losses.

Our 2026 outlook for the GCC is weaker than three months back, 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 incurred in the last few months is substantial. Saudi GDP information for Q1 revealed development 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 interruption struck late in the quarter.

The 2026 Business Climate of the GCC

Aside from Oman, all GCC manufacturers along with Iran and Iraq have suffered comprehensive oil and gas production losses considering that the start of the conflict. Might data show 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 avoid an even larger plunge in output.

ANSR July GCC PRs 50DR+

We forecast GCC oil sector output to agreement by 14.5% this year, which will mark the steepest decrease in numerous years. We then anticipate a 23.5% rebound next year, driven mostly by normalisation from a seriously depressed base. Meanwhile, oil prices have actually been volatile, reducing below $85 per barrel as the interim agreement was announced.

In the medium term, we expect oil costs to be a little lower than our pre-war baseline, as the UAE's departure from OPEC+ permits a gradual increase 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 new West-East pipeline that should double the capacity of export through Fujairah.

The May PMI surveys reported output growth reaching its strongest level in 3 months, driven largely by improved domestic need. They stay listed below long-run averages, with weak export orders and price pressures from greater material and transport expenses are a common style. Overall, we anticipate a 1.1% contraction in GCC non-energy sectors this year (compared to 4.2% growth pre-war) and a steady recovery over the remainder of the decade.