Upcoming GCC Financial Outlook

Threats are tilted to the drawback. In case of a prolonged dispute, the current impacts on the area will be compoundedthrough raised energy and food prices, decreasing trade, tourism and remittances, increased fiscal pressures, and displacement. "The present crisis is a stark reminder of the work ahead for the area: not only to weather shocks, however to reconstruct more resistant economies with stronger macroeconomic fundamentals, innovate and enhance governance, purchase infrastructure, and enhance employment-creating sectors," stated.

With peace and the ideal action, nations can construct the institutions, capabilities and competitive sectors that produce opportunities for people." With this long-lasting vision in mind, the report takes a close appearance at the region's capacity for industrial policy federal government actions to increase strategic business activity as a chauffeur of economic growth and job development.

ANSR July GCC PRs 50DR+

Governments in the area have embraced commercial policy at a high rate in the last years, typically through sovereign wealth funds and state-owned enterprises, however the outcomes have been mixed. The report highlights the crucial need for strong organizations and mindful targeting of policies. "As countries deal with the heavy toll of the present conflict, it is essential to also not lose sight of the work needed for lasting peace and prosperity," said.

Assessing Regional Market Potential in 2026

Q2 2026: The ICAEW Economic Update Middle East, is a quarterly economic projection for the region prepared directly for the finance occupation. The GCC economy faces a marked contraction this year pending information of the US-Iran contract to end the war. We expect energy flows, tourist and financier sentiment to gradually normalise as war interruptions go away.

ANSR July GCC PRs 50DR+

The interim arrangement in between the United States and Iran is a significant action towards reaching a full-blown offer. A full go back to normality in the Strait of Hormuz will likely require time, however the threat of a recession-inducing oil price spike has actually decreased. Global GDP is anticipated to grow by 2.4% this year, 0.2 ppt less than we forecasted 3 months earlier, 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 first year of the Covid pandemic. Kuwait, Iran, Iraq and Qatar stick out as the hardest hit, owing to their failure to avoid 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% decrease forecasted previously. We anticipate Oman and Saudi Arabia to be the least adversely impacted by the fallout from the conflict, with both economies continuing to expand this year.

The economic damage incurred in the last couple of months is significant. Saudi GDP information for Q1 showed growth slowed to 3% y/y, with non-oil activities expanding by 2.9%, the weakest speed because 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 disruption struck late in the quarter.

The Future Investment Landscape of Arabia

Aside from Oman, all GCC manufacturers as well as Iran and Iraq have suffered extensive oil and gas production losses considering that the start of the conflict. Might information show regional production almost cut in half from pre-war levels, with the decrease 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+

However, we forecast GCC oil sector output to contract by 14.5% this year, which will mark the steepest decline in a number of years. We then expect a 23.5% rebound next year, driven mostly by normalisation from a seriously depressed base. Meanwhile, oil costs have been unstable, relieving listed below $85 per barrel as the interim agreement was revealed.

In the medium term, we expect oil costs to be slightly lower than our pre-war baseline, as the UAE's departure from OPEC+ enables a gradual increase in its output towards the 5mn barrel each day production target as soon as trade normalises. Versus this background, the UAE will accelerate the building of a brand-new West-East pipeline that should double the capacity of export through Fujairah.

The May PMI studies reported output development reaching its greatest level in three months, driven largely by enhanced domestic need. They stay listed below long-run averages, with weak export orders and cost pressures from higher material and transport expenses are a common style. Overall, we anticipate 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 years.