Top Foreign Investment Prospects for the GCC Region

Risks are slanted to the downside. In the event of a prolonged conflict, the present impacts on the area will be compoundedthrough raised energy and food costs, decreasing trade, tourist and remittances, increased financial pressures, and displacement. "The current crisis is a plain pointer of the work ahead for the region: not just to weather shocks, however to restore more resilient economies with stronger macroeconomic principles, innovate and enhance governance, invest in infrastructure, and improve employment-creating sectors," stated.

With peace and the ideal action, nations can construct the institutions, abilities and competitive sectors that develop opportunities for individuals." With this long-term vision in mind, the report takes a close look at the area's capacity for industrial policy federal government actions to increase tactical company activity as a chauffeur of financial development and task creation.

ANSR July GCC PRs 50DR+

Governments in the region have adopted commercial policy at a high rate in the last decade, often through sovereign wealth funds and state-owned enterprises, however the outcomes have been blended. The report highlights the important requirement for strong institutions and cautious targeting of policies. "As nations face the heavy toll of the present conflict, it is necessary to likewise not lose sight of the work required for lasting peace and success," said.

Key International Investment Avenues for the GCC Region

Q2 2026: The ICAEW Economic Update Middle East, is a quarterly economic forecast for the area prepared straight for the financing profession. The GCC economy deals with a significant contraction this year pending information of the US-Iran agreement to end the war. We anticipate energy flows, tourism and investor belief to slowly normalise as war disruptions subside.

ANSR July GCC PRs 50DR+

The interim contract in between the United States and Iran is a substantial action towards reaching a full-blown offer. A complete return to normality in the Strait of Hormuz will likely require time, however the risk of a recession-inducing oil rate spike has declined. Global GDP is anticipated to grow by 2.4% this year, 0.2 ppt less than we projected 3 months earlier, and 3.1% in 2027.

We forecast a 4.1% contraction in Middle East GDP this year (versus predicted 3.6% expansion before the war), higher than the decline in the very first year of the Covid pandemic. Kuwait, Iran, Iraq and Qatar stick out as the hardest struck, owing to their inability to prevent the interruption to local shipping, war-driven infrastructure damage and tourist losses.

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

The financial damage sustained in the last couple of months is significant. Saudi GDP information for Q1 showed growth slowed to 3% y/y, with non-oil activities expanding by 2.9%, the weakest rate considering that 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 disturbance hit late in the quarter.

Top Foreign Investment Prospects in the GCC Market

Aside from Oman, all GCC manufacturers in addition to Iran and Iraq have suffered substantial oil and gas production losses considering that the start of the dispute. May information show regional production nearly 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 assisted prevent an even bigger plunge in output.

ANSR July GCC PRs 50DR+

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

In the medium term, we expect oil costs to be slightly lower than our pre-war baseline, as the UAE's departure from OPEC+ enables a progressive boost in its output towards the 5mn barrel each day production target as soon as trade normalises. Versus this backdrop, the UAE will speed up the construction of a brand-new West-East pipeline that should double the capacity of export through Fujairah.

The May PMI surveys reported output growth reaching its greatest level in 3 months, driven largely by enhanced domestic need. They remain listed below long-run averages, with weak export orders and price pressures from greater product and transportation expenses are a typical theme. In general, we anticipate a 1.1% contraction in GCC non-energy sectors this year (compared to 4.2% development pre-war) and a progressive recovery over the remainder of the years.