International Investment Opportunities within the Middle East

Risks are slanted to the disadvantage. In the occasion of an extended dispute, the existing effect on the region will be compoundedthrough raised energy and food prices, declining trade, tourism 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 stronger macroeconomic principles, innovate and enhance governance, buy facilities, and boost employment-creating sectors," stated.

With peace and the right action, countries can develop the organizations, abilities and competitive sectors that create chances for individuals." With this long-term vision in mind, the report takes a close take a look at the area's potential for industrial policy federal government actions to increase tactical company activity as a chauffeur of financial growth and task development.

ANSR July GCC PRs 50DR+

Federal governments in the region have adopted commercial policy at a high rate in the last years, often through sovereign wealth funds and state-owned enterprises, but the outcomes have actually been mixed. The report highlights the important need for strong institutions and cautious targeting of policies. "As countries face the heavy toll of today conflict, it is very important to likewise not lose sight of the work needed for lasting peace and success," said.

Key International Investment Avenues for the GCC Market

Q2 2026: The ICAEW Economic Update Middle East, is a quarterly financial forecast for the region prepared straight for the finance occupation. The GCC economy faces a significant contraction this year pending details of the US-Iran agreement to end the war. We anticipate energy circulations, tourist and investor belief to gradually normalise as war disruptions decrease.

ANSR July GCC PRs 50DR+

The interim agreement in between the United States and Iran is a considerable action towards reaching a full-blown offer. A complete return to normality in the Strait of Hormuz will likely take time, but the danger of a recession-inducing oil cost spike has declined. Worldwide GDP is anticipated to grow by 2.4% this year, 0.2 ppt less than we projected three months back, 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 first year of the Covid pandemic. Kuwait, Iran, Iraq and Qatar stick out as the hardest hit, owing to their inability to prevent the interruption to regional shipping, war-driven facilities damage and tourism losses.

Our 2026 outlook for the GCC is weaker than three months earlier, with GDP projection to contract by 2.4% compared to a 0.2% decline projected formerly. We expect Oman and Saudi Arabia to be the least adversely affected by the fallout from the dispute, with both economies continuing to broaden this year.

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

Essential Economic Diversification for 2026

Aside from Oman, all GCC producers as well as Iran and Iraq have suffered extensive oil and gas production losses given that the start of the dispute. Might information show regional production almost 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 bigger plunge in output.

ANSR July GCC PRs 50DR+

We forecast GCC oil sector output to contract 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 significantly depressed base. Meanwhile, oil costs have been unpredictable, relieving listed below $85 per barrel as the interim agreement was announced.

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 increase in its output towards the 5mn barrel each day production target once trade normalises. Against 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 surveys reported output development reaching its strongest level in three months, driven mostly by enhanced domestic demand. They remain listed below long-run averages, with weak export orders and rate pressures from higher product and transport expenses are a common theme. Overall, 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 rest of the decade.