Foreign Investment Opportunities across the GCC

Risks are tilted to the disadvantage. In the event of an extended conflict, the present effects on the region will be compoundedthrough raised energy and food prices, decreasing trade, tourism and remittances, increased fiscal pressures, and displacement. "The current crisis is a plain tip of the work ahead for the area: not only to weather shocks, but to rebuild more resistant economies with more powerful macroeconomic principles, innovate and enhance governance, purchase facilities, and improve employment-creating sectors," stated.

With peace and the ideal action, countries can build the organizations, abilities 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 capacity for industrial policy federal government actions to increase tactical service activity as a chauffeur of financial development and task development.

ANSR July GCC PRs 50DR+

Governments in the area have actually adopted commercial 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 organizations and mindful targeting of policies. "As countries face the heavy toll of the present dispute, it is necessary to also not lose sight of the work needed for lasting peace and success," stated.

Positioning Regional Investments against 2026 Shifts

Q2 2026: The ICAEW Economic Update Middle East, is a quarterly financial projection for the area prepared directly for the finance occupation. The GCC economy deals with a significant contraction this year pending details of the US-Iran arrangement to end the war. We expect energy flows, tourist and financier belief to slowly normalise as war disturbances subside.

ANSR July GCC PRs 50DR+

The interim contract in between the United States and Iran is a considerable action towards reaching a full-blown offer. A full go back to normality in the Strait of Hormuz will likely take some time, however the danger of a recession-inducing oil cost spike has actually decreased. International GDP is anticipated to grow by 2.4% this year, 0.2 ppt less than we projected 3 months earlier, and 3.1% in 2027.

We forecast a 4.1% contraction in Middle East GDP this year (versus forecasted 3.6% expansion before the war), higher than the decrease in the first year of the Covid pandemic. Kuwait, Iran, Iraq and Qatar stand out as the hardest struck, owing to their inability to prevent the disturbance to regional shipping, war-driven infrastructure damage and tourist losses.

Our 2026 outlook for the GCC is weaker than three months back, with GDP projection to agreement by 2.4% compared to a 0.2% decrease forecasted previously. We expect Oman and Saudi Arabia to be the least adversely affected by the fallout from the conflict, with both economies continuing to expand this year.

The financial damage incurred in the last few months is substantial. Saudi GDP data for Q1 revealed growth slowed to 3% y/y, with non-oil activities expanding by 2.9%, the weakest speed 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 struck late in the quarter.

How Industrial Diversification Can Transform Arabian Markets

Aside from Oman, all GCC manufacturers in addition to Iran and Iraq have actually suffered substantial oil and gas production losses given that the start of the conflict. May information reveal local 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 assisted prevent an even larger plunge in output.

ANSR July GCC PRs 50DR+

We forecast GCC oil sector output to agreement by 14.5% this year, which will mark the steepest decrease in a number of decades. We then expect a 23.5% rebound next year, driven largely by normalisation from a badly depressed base. On the other hand, oil costs have actually been unstable, easing below $85 per barrel as the interim arrangement was revealed.

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

The May PMI surveys reported output growth reaching its strongest level in three months, driven mainly by improved domestic need. Nevertheless, they stay below long-run averages, with weak export orders and rate pressures from greater material and transport costs are a common theme. Overall, we anticipate a 1.1% contraction in GCC non-energy sectors this year (compared to 4.2% development pre-war) and a gradual recovery over the remainder of the decade.