Foreign Investment Opportunities within the GCC

Threats are slanted to the disadvantage. In the event of an extended dispute, the present effects on the area will be compoundedthrough raised energy and food prices, decreasing trade, tourism and remittances, increased financial pressures, and displacement. "The existing crisis is a stark pointer of the work ahead for the area: not only to weather shocks, however to reconstruct more resistant economies with more powerful macroeconomic fundamentals, innovate and enhance governance, buy facilities, and improve employment-creating sectors," said.

With peace and the best action, nations can construct the organizations, abilities and competitive sectors that produce opportunities for individuals." With this long-lasting vision in mind, the report takes a close appearance at the region's capacity for commercial policy government actions to increase tactical company activity as a chauffeur of economic growth and job creation.

ANSR July GCC PRs 50DR+

Federal governments in the area have embraced industrial policy at a high rate in the last decade, often through sovereign wealth funds and state-owned business, but the outcomes have been mixed. The report highlights the crucial requirement for strong institutions and cautious targeting of policies. "As nations deal with the heavy toll of today conflict, it is important to also not lose sight of the work needed for lasting peace and success," stated.

2026 Regional Economic Forecasts

Q2 2026: The ICAEW Economic Update Middle East, is a quarterly financial forecast for the area prepared straight for the finance occupation. The GCC economy deals with a marked contraction this year pending details of the US-Iran contract to end the war. We expect energy circulations, tourism and investor sentiment to slowly normalise as war interruptions subside.

ANSR July GCC PRs 50DR+

The interim arrangement in between the United States and Iran is a considerable step towards reaching a full-blown offer. A complete go back to normality in the Strait of Hormuz will likely require time, but the risk of a recession-inducing oil price spike has decreased. Global GDP is expected to grow by 2.4% this year, 0.2 ppt less than we forecasted three months ago, and 3.1% in 2027.

We anticipate a 4.1% contraction in Middle East GDP this year (versus predicted 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 inability to prevent the interruption to regional shipping, war-driven facilities damage and tourist 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% decrease projected previously. We expect Oman and Saudi Arabia to be the least adversely impacted by the fallout from the conflict, with both economies continuing to expand this year.

The financial damage incurred in the last few months is substantial. Saudi GDP data for Q1 showed development slowed to 3% y/y, with non-oil activities broadening by 2.9%, the weakest pace considering 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.

2026 Business Landscape in Arabia

Aside from Oman, all GCC manufacturers as well as Iran and Iraq have suffered comprehensive oil and gas production losses given that the start of the conflict. Might information show regional production almost 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 helped prevent an even bigger plunge in output.

ANSR July GCC PRs 50DR+

We forecast GCC oil sector output to contract by 14.5% this year, which will mark the steepest decrease in several decades. We then expect a 23.5% rebound next year, driven mainly by normalisation from a badly depressed base. Oil costs have been unpredictable, relieving 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 standard, as the UAE's departure from OPEC+ permits a steady 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 ought to double the capacity of export through Fujairah.

The May PMI surveys reported output growth reaching its greatest level in 3 months, driven mostly by improved domestic demand. However, they stay listed below long-run averages, with weak export orders and rate pressures from higher product 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% development pre-war) and a steady recovery over the remainder of the decade.