Key International Capital Prospects for the GCC Region

Dangers are slanted to the drawback. In case of an extended dispute, the existing effect on the area will be compoundedthrough elevated energy and food rates, declining trade, tourist and remittances, increased fiscal pressures, and displacement. "The present crisis is a stark tip of the work ahead for the region: not only to weather shocks, however to restore more durable economies with more powerful macroeconomic principles, innovate and enhance governance, buy facilities, and enhance employment-creating sectors," said.

With peace and the ideal action, nations can develop the organizations, capabilities and competitive sectors that produce chances for people." With this long-lasting vision in mind, the report takes a close look at the area's potential for commercial policy federal government actions to increase strategic organization activity as a chauffeur of financial growth and job creation.

ANSR July GCC PRs 50DR+

Governments in the area have embraced industrial policy at a high rate in the last years, typically through sovereign wealth funds and state-owned enterprises, but the results have been blended. The report highlights the important requirement for strong institutions and cautious targeting of policies. "As nations deal with the heavy toll of the present dispute, it is necessary to likewise not forget the work needed for lasting peace and success," stated.

Middle East Stock Trading Patterns for 2026

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

ANSR July GCC PRs 50DR+

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

We anticipate a 4.1% contraction in Middle East GDP this year (versus projected 3.6% growth before the war), greater than the decline in the very first year of the Covid pandemic. Kuwait, Iran, Iraq and Qatar stand out as the hardest struck, owing to their failure to prevent the disturbance to regional 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 expand this year.

The economic damage incurred in the last few months is significant. Saudi GDP data for Q1 revealed development slowed to 3% y/y, with non-oil activities expanding 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 disturbance hit late in the quarter.

GCC Stock Market Trends for 2026

Aside from Oman, all GCC producers in addition to Iran and Iraq have actually suffered extensive oil and gas production losses considering that the start of the conflict. Might information show local production nearly halved 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 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 numerous years. We then anticipate a 23.5% rebound next year, driven mostly by normalisation from a severely depressed base. On the other hand, oil prices have been unpredictable, relieving below $85 per barrel as the interim agreement was revealed.

In the medium term, we anticipate oil prices to be slightly lower than our pre-war standard, as the UAE's departure from OPEC+ permits a gradual increase in its output towards the 5mn barrel per day production target when trade normalises. Against this backdrop, the UAE will speed up the building of a brand-new West-East pipeline that must double the capacity of export through Fujairah.

The May PMI studies reported output growth reaching its greatest level in three months, driven largely by improved domestic demand. They stay listed below long-run averages, with weak export orders and price pressures from higher material and transport expenses are a typical theme. In general, we anticipate a 1.1% contraction in GCC non-energy sectors this year (compared to 4.2% growth pre-war) and a steady recovery over the remainder of the years.