Strategic Economic Expansion for 2026

Threats are tilted to the downside. In the event of a prolonged dispute, the current impacts 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 stark reminder of the work ahead for the region: not only to weather shocks, however to restore more resilient economies with more powerful macroeconomic fundamentals, innovate and enhance governance, invest in infrastructure, and boost employment-creating sectors," stated.

With peace and the best action, countries can construct the institutions, capabilities and competitive sectors that produce chances for individuals." With this long-lasting vision in mind, the report takes a close take a look at the area's capacity for commercial policy government actions to increase strategic organization activity as a chauffeur of economic growth and job creation.

ANSR July GCC PRs 50DR+

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

Emerging Equity Trading Trends in 2026

Q2 2026: The ICAEW Economic Update Middle East, is a quarterly economic projection for the area prepared straight for the financing occupation. The GCC economy faces a significant contraction this year pending information of the US-Iran contract to end the war. We expect energy flows, tourism and financier belief to slowly normalise as war disturbances diminish.

ANSR July GCC PRs 50DR+

The interim agreement between the US and Iran is a substantial action towards reaching a full-blown deal. A complete go back to normality in the Strait of Hormuz will likely take some time, but the danger of a recession-inducing oil cost spike has actually decreased. Worldwide GDP is anticipated 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), higher than the decline in the first year of the Covid pandemic. Kuwait, Iran, Iraq and Qatar stand apart as the hardest hit, owing to their failure to prevent the disturbance to local shipping, war-driven facilities damage and tourism losses.

Our 2026 outlook for the GCC is weaker than three months ago, with GDP forecast to contract by 2.4% compared to a 0.2% decline predicted formerly. We anticipate Oman and Saudi Arabia to be the least negatively impacted by the fallout from the dispute, with both economies continuing to broaden this year.

The economic damage incurred in the last few months is significant. Saudi GDP information for Q1 showed growth 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 disturbance hit late in the quarter.

International Capital Opportunities within the Middle East

Aside from Oman, all GCC manufacturers along with Iran and Iraq have suffered comprehensive oil and gas production losses since the start of the dispute. Might information show regional 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 assisted avoid an even bigger plunge in output.

ANSR July GCC PRs 50DR+

Nonetheless, we forecast GCC oil sector output to contract by 14.5% this year, which will mark the steepest decrease in several years. We then anticipate a 23.5% rebound next year, driven mainly by normalisation from a badly depressed base. Oil costs have actually been unpredictable, alleviating listed below $85 per barrel as the interim agreement was revealed.

In the medium term, we anticipate oil costs to be a little lower than our pre-war baseline, as the UAE's departure from OPEC+ allows for a gradual increase in its output towards the 5mn barrel per day production target when trade normalises. Against this background, the UAE will accelerate the building of a new West-East pipeline that should double the capability of export through Fujairah.

The May PMI studies reported output growth reaching its greatest level in three months, driven mostly by enhanced domestic demand. Nevertheless, they remain below long-run averages, with weak export orders and cost 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% growth pre-war) and a progressive recovery over the remainder of the years.