International Capital Opportunities across the GCC

Threats are tilted to the disadvantage. In the occasion of an extended dispute, the existing effects on the region will be compoundedthrough elevated energy and food costs, declining trade, tourist and remittances, increased fiscal pressures, and displacement. "The present crisis is a stark pointer of the work ahead for the region: not just to weather shocks, however to reconstruct more durable economies with stronger macroeconomic principles, innovate and improve governance, purchase facilities, and enhance employment-creating sectors," said.

With peace and the best action, nations can develop the organizations, abilities and competitive sectors that develop opportunities for individuals." With this long-term vision in mind, the report takes a close appearance at the area's capacity for commercial policy government actions to increase tactical business activity as a motorist of financial development and task development.

ANSR July GCC PRs 50DR+

Federal governments in the area have actually embraced commercial policy at a high rate in the last decade, frequently through sovereign wealth funds and state-owned enterprises, however the results have been blended. The report highlights the vital requirement for strong organizations and careful targeting of policies. "As nations face the heavy toll of the present dispute, it is necessary to likewise not lose sight of the work needed for long-lasting peace and success," said.

Assessing Regional Investment Resilience for 2026

Q2 2026: The ICAEW Economic Update Middle East, is a quarterly financial forecast for the region prepared directly for the finance profession. The GCC economy faces a marked contraction this year pending information of the US-Iran contract to end the war. We anticipate energy flows, tourism and investor sentiment to gradually normalise as war interruptions decrease.

ANSR July GCC PRs 50DR+

The interim contract in between the US and Iran is a significant action towards reaching a full-blown offer. A complete go back to normality in the Strait of Hormuz will likely take some time, however the threat of a recession-inducing oil rate spike has declined. International GDP is anticipated to grow by 2.4% this year, 0.2 ppt less than we predicted 3 months earlier, 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 first year of the Covid pandemic. Kuwait, Iran, Iraq and Qatar stand out as the hardest hit, 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% decline projected previously. We anticipate Oman and Saudi Arabia to be the least adversely affected by the fallout from the conflict, with both economies continuing to broaden this year.

The financial damage incurred in the last few months is significant. Saudi GDP information for Q1 revealed development slowed to 3% y/y, with non-oil activities broadening by 2.9%, the weakest rate given 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 interruption struck late in the quarter.

2026 Middle Eastern Economic Projections

Aside from Oman, all GCC manufacturers as well as Iran and Iraq have actually suffered substantial oil and gas production losses since the start of the conflict. May information show regional production nearly 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 actually helped avoid 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 numerous years. We then anticipate a 23.5% rebound next year, driven largely by normalisation from a significantly depressed base. Meanwhile, oil prices have actually been volatile, easing below $85 per barrel as the interim arrangement was announced.

In the medium term, we expect oil rates to be slightly lower than our pre-war baseline, as the UAE's departure from OPEC+ permits a steady boost in its output towards the 5mn barrel daily production target once trade normalises. Against this background, the UAE will accelerate the building of a new West-East pipeline that must double the capability of export through Fujairah.

The May PMI surveys reported output development reaching its strongest level in three months, driven mainly by improved domestic demand. Nevertheless, they stay below long-run averages, with weak export orders and price pressures from higher material and transportation expenses are a typical theme. Overall, 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 remainder of the decade.