Top International Capital Avenues in the GCC Market

Threats are slanted to the downside. In the event of an extended conflict, the present effect on the region will be compoundedthrough raised energy and food costs, decreasing trade, tourist and remittances, increased financial pressures, and displacement. "The existing crisis is a stark tip of the work ahead for the area: not just to weather shocks, however to restore more resistant economies with stronger macroeconomic fundamentals, innovate and enhance governance, buy facilities, and enhance employment-creating sectors," said.

With peace and the ideal action, countries can build the institutions, capabilities and competitive sectors that produce opportunities for people." With this long-term vision in mind, the report takes a close take a look at the region's capacity for commercial policy federal government actions to increase tactical company activity as a motorist of financial development and job production.

ANSR July GCC PRs 50DR+

Governments in the area have embraced commercial policy at a high rate in the last years, often through sovereign wealth funds and state-owned business, but the results have actually been blended. The report highlights the crucial need for strong organizations and cautious targeting of policies. "As countries face the heavy toll of today conflict, it is important to likewise not lose sight of the work needed for long-lasting peace and success," stated.

Driving Non-Oil Growth through Strategic Diversification

Q2 2026: The ICAEW Economic Update Middle East, is a quarterly economic forecast for the region prepared directly 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 flows, tourism and financier belief to slowly normalise as war interruptions subside.

ANSR July GCC PRs 50DR+

The interim contract between the United States and Iran is a significant step towards reaching a full-blown deal. A full go back to normality in the Strait of Hormuz will likely require time, however the risk of a recession-inducing oil rate spike has declined. Worldwide GDP is expected to grow by 2.4% this year, 0.2 ppt less than we forecasted 3 months earlier, and 3.1% in 2027.

We forecast 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 apart as the hardest hit, owing to their failure to prevent the interruption to regional shipping, war-driven facilities damage and tourist losses.

Our 2026 outlook for the GCC is weaker than 3 months ago, with GDP projection to contract by 2.4% compared to a 0.2% decline forecasted previously. We anticipate Oman and Saudi Arabia to be the least negatively affected by the fallout from the conflict, with both economies continuing to expand this year.

The financial damage sustained in the last couple of months is substantial. Saudi GDP information for Q1 showed development slowed to 3% y/y, with non-oil activities expanding by 2.9%, the weakest speed since 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 struck late in the quarter.

How Industrial Diversification Will Transform Arabian Markets

Aside from Oman, all GCC producers as well as Iran and Iraq have suffered comprehensive oil and gas production losses considering that the start of the conflict. Might data 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.

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We forecast GCC oil sector output to contract by 14.5% this year, which will mark the steepest decrease in several years. We then expect a 23.5% rebound next year, driven largely by normalisation from a significantly depressed base. Oil costs have been volatile, reducing below $85 per barrel as the interim contract was announced.

In the medium term, we anticipate oil rates to be somewhat lower than our pre-war standard, as the UAE's departure from OPEC+ allows for a steady boost in its output towards the 5mn barrel daily production target once trade normalises. Versus this backdrop, the UAE will speed up the construction of a brand-new West-East pipeline that ought to double the capacity of export through Fujairah.

The May PMI surveys reported output growth reaching its strongest level in three months, driven mainly by enhanced domestic need. They stay below long-run averages, with weak export orders and cost pressures from greater material and transport expenses are a common theme. In general, we expect a 1.1% contraction in GCC non-energy sectors this year (compared to 4.2% growth pre-war) and a progressive healing over the rest of the years.