Foreign Investment Opportunities within the GCC

Threats are tilted to the disadvantage. In case of a prolonged conflict, the existing influence on the region will be compoundedthrough raised energy and food prices, decreasing trade, tourist and remittances, increased financial pressures, and displacement. "The existing crisis is a stark tip of the work ahead for the area: not just to weather shocks, however to rebuild more durable economies with more powerful macroeconomic basics, innovate and improve governance, buy infrastructure, and enhance employment-creating sectors," said.

With peace and the ideal action, nations can construct the organizations, abilities and competitive sectors that create opportunities for people." With this long-lasting vision in mind, the report takes a close look at the region's potential for commercial policy government actions to increase tactical service activity as a driver of economic development and job creation.

ANSR July GCC PRs 50DR+

Federal governments in the area have actually adopted industrial policy at a high rate in the last decade, often through sovereign wealth funds and state-owned enterprises, however the results have actually been blended. The report highlights the critical requirement for strong institutions and careful targeting of policies. "As countries face the heavy toll of today dispute, it is necessary to likewise not lose sight of the work needed for long-lasting peace and prosperity," stated.

Key International Capital Prospects in the GCC Market

Q2 2026: The ICAEW Economic Update Middle East, is a quarterly economic forecast for the region prepared directly for the financing occupation. The GCC economy deals with a marked contraction this year pending information of the US-Iran agreement to end the war. We anticipate energy flows, tourist and financier belief to gradually normalise as war disturbances diminish.

ANSR July GCC PRs 50DR+

The interim contract between the United States and Iran is a substantial action towards reaching a full-blown deal. A full go back to normality in the Strait of Hormuz will likely take some time, however the danger of a recession-inducing oil price spike has actually declined. Worldwide 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 stand out as the hardest hit, owing to their inability to prevent the disruption to local shipping, war-driven infrastructure damage and tourism losses.

Our 2026 outlook for the GCC is weaker than 3 months ago, with GDP projection to contract by 2.4% compared to a 0.2% decline projected previously. We anticipate Oman and Saudi Arabia to be the least negatively impacted by the fallout from the dispute, with both economies continuing to expand this year.

The economic damage sustained in the last few months is considerable. Saudi GDP data for Q1 revealed growth slowed to 3% y/y, with non-oil activities broadening by 2.9%, the weakest pace 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 disruption hit late in the quarter.

Middle East Stock Market Patterns in 2026

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 regional production nearly halved from pre-war levels, with the decrease 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 assisted avoid an even larger plunge in output.

ANSR July GCC PRs 50DR+

Nonetheless, we anticipate GCC oil sector output to contract by 14.5% this year, which will mark the steepest decline in numerous years. We then expect a 23.5% rebound next year, driven mostly by normalisation from a seriously depressed base. Oil prices have actually been unpredictable, relieving below $85 per barrel as the interim arrangement was revealed.

In the medium term, we expect oil rates to be slightly lower than our pre-war standard, as the UAE's departure from OPEC+ permits a steady increase in its output towards the 5mn barrel per day production target when trade normalises. Versus this background, the UAE will speed up the construction of a 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 3 months, driven mainly by improved domestic need. Nevertheless, they remain listed below long-run averages, with weak export orders and price pressures from greater material and transport expenses are a common style. In general, we anticipate a 1.1% contraction in GCC non-energy sectors this year (compared to 4.2% development pre-war) and a progressive healing over the remainder of the decade.