Future GCC Market Outlook

Dangers are tilted to the disadvantage. In case of a prolonged conflict, the existing effects on the area will be compoundedthrough raised energy and food costs, declining trade, tourist and remittances, increased fiscal pressures, and displacement. "The current crisis is a plain tip of the work ahead for the region: not only to weather shocks, but to restore more durable economies with more powerful macroeconomic fundamentals, innovate and enhance governance, purchase facilities, and boost employment-creating sectors," stated.

With peace and the best action, nations can build the organizations, capabilities and competitive sectors that develop chances for individuals." With this long-term vision in mind, the report takes a close take a look at the area's capacity for commercial policy government actions to increase tactical organization activity as a chauffeur of economic development and task creation.

ANSR July GCC PRs 50DR+

Federal governments in the region have actually embraced commercial policy at a high rate in the last years, often through sovereign wealth funds and state-owned enterprises, however the results have been blended. The report highlights the crucial requirement for strong institutions and cautious targeting of policies. "As nations face the heavy toll of today dispute, it is necessary to likewise not lose sight of the work required for long-lasting peace and success," said.

Navigating Investment Strategies in a 2026 Economy

Q2 2026: The ICAEW Economic Update Middle East, is a quarterly economic forecast for the region prepared directly for the finance profession. The GCC economy deals with a marked contraction this year pending details of the US-Iran agreement to end the war. We anticipate energy circulations, tourism and investor sentiment to slowly normalise as war interruptions decrease.

ANSR July GCC PRs 50DR+

The interim agreement in between the US and Iran is a significant action towards reaching a full-blown deal. A complete return to normality in the Strait of Hormuz will likely take some time, however the threat of a recession-inducing oil price spike has actually declined. Worldwide GDP is expected to grow by 2.4% this year, 0.2 ppt less than we forecasted three 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 stand apart as the hardest hit, owing to their inability to avoid the disturbance to local shipping, war-driven facilities damage and tourist losses.

Our 2026 outlook for the GCC is weaker than three months earlier, with GDP projection to agreement by 2.4% compared to a 0.2% decrease projected formerly. 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 economic damage incurred in the last couple of months is considerable. Saudi GDP data for Q1 showed growth 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 interruption hit late in the quarter.

Top International Capital Avenues in the GCC Region

Aside from Oman, all GCC producers as well as Iran and Iraq have actually suffered substantial oil and gas production losses because the start of the dispute. May information show regional 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 helped prevent an even larger plunge in output.

ANSR July GCC PRs 50DR+

Nevertheless, we anticipate GCC oil sector output to agreement by 14.5% this year, which will mark the steepest decline in several years. We then anticipate a 23.5% rebound next year, driven largely by normalisation from a seriously depressed base. On the other hand, oil prices have been volatile, easing listed below $85 per barrel as the interim agreement was revealed.

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 progressive boost in its output towards the 5mn barrel daily production target as soon as trade normalises. Against this backdrop, the UAE will accelerate the construction of a brand-new West-East pipeline that need to double the capability of export through Fujairah.

The May PMI surveys reported output growth reaching its strongest level in three months, driven largely by improved domestic need. However, they remain listed below long-run averages, with weak export orders and cost pressures from higher product and transport costs are a typical theme. Overall, we expect a 1.1% contraction in GCC non-energy sectors this year (compared to 4.2% development pre-war) and a gradual healing over the remainder of the decade.