Middle East Stock Market Trends in 2026

Threats are tilted to the disadvantage. In the event of a prolonged conflict, the existing effect on the area will be compoundedthrough elevated energy and food prices, declining trade, tourist and remittances, increased fiscal 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 resilient economies with stronger macroeconomic fundamentals, innovate and improve governance, invest in infrastructure, and improve 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-lasting vision in mind, the report takes a close take a look at the area's potential for commercial policy federal government actions to increase tactical company activity as a driver of financial growth and task creation.

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, but the outcomes have actually been mixed. The report highlights the critical requirement for strong organizations and mindful targeting of policies. "As nations face the heavy toll of today dispute, it is essential to likewise not lose sight of the work needed for long-lasting peace and prosperity," said.

The 2026 Business Climate in Arabia

Q2 2026: The ICAEW Economic Update Middle East, is a quarterly economic forecast for the region prepared straight for the finance occupation. The GCC economy deals with a significant contraction this year pending details of the US-Iran agreement to end the war. We expect energy flows, tourist and investor belief to gradually normalise as war disturbances go away.

ANSR July GCC PRs 50DR+

The interim contract between the United States and Iran is a significant action 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 price spike has declined. International GDP is expected to grow by 2.4% this year, 0.2 ppt less than we predicted three months ago, and 3.1% in 2027.

We forecast a 4.1% contraction in Middle East GDP this year (versus predicted 3.6% growth before the war), greater than the decrease in the very first year of the Covid pandemic. Kuwait, Iran, Iraq and Qatar stand out as the hardest hit, owing to their failure to avoid the disruption to local shipping, war-driven infrastructure damage and tourism 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 predicted previously. We expect Oman and Saudi Arabia to be the least adversely impacted by the fallout from the dispute, with both economies continuing to broaden this year.

The economic damage sustained in the last few months is substantial. Saudi GDP information for Q1 showed growth 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 struck late in the quarter.

Strategic Economic Diversification in the Future

Aside from Oman, all GCC producers in addition to Iran and Iraq have actually suffered extensive oil and gas production losses because the start of the conflict. May data reveal local production nearly 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 avoid an even larger plunge in output.

ANSR July GCC PRs 50DR+

However, we forecast GCC oil sector output to agreement by 14.5% this year, which will mark the steepest decline in a number of decades. We then expect a 23.5% rebound next year, driven largely by normalisation from a seriously depressed base. On the other hand, oil costs have been volatile, reducing listed below $85 per barrel as the interim arrangement was announced.

In the medium term, we expect oil costs to be somewhat lower than our pre-war standard, as the UAE's departure from OPEC+ enables for a progressive boost in its output towards the 5mn barrel each day production target once trade normalises. Versus this background, the UAE will speed up the construction of a 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 enhanced domestic demand. They remain below long-run averages, with weak export orders and rate pressures from higher product and transport costs are a typical style. Overall, 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 rest of the years.