Key Equity Capital Insights for GCC Growth

Risks are tilted to the drawback. In case of a prolonged dispute, the present effect on the region will be compoundedthrough elevated energy and food costs, decreasing trade, tourist and remittances, increased financial pressures, and displacement. "The present crisis is a stark suggestion of the work ahead for the region: not only to weather shocks, but to reconstruct more resistant economies with stronger macroeconomic fundamentals, innovate and enhance governance, buy facilities, and increase employment-creating sectors," said.

With peace and the best action, countries can construct the organizations, abilities and competitive sectors that develop chances for individuals." With this long-term vision in mind, the report takes a close appearance at the area's potential for commercial policy federal government actions to increase tactical service activity as a driver of financial development and task creation.

ANSR July GCC PRs 50DR+

Federal governments in the region have embraced industrial policy at a high rate in the last decade, typically through sovereign wealth funds and state-owned business, however the results have actually been mixed. The report highlights the crucial need for strong organizations and careful targeting of policies. "As countries deal with the heavy toll of the present conflict, it is crucial to also not lose sight of the work needed for lasting peace and success," stated.

International Capital Opportunities across the Middle East

Q2 2026: The ICAEW Economic Update Middle East, is a quarterly financial forecast for the area prepared directly for the finance profession. The GCC economy faces a marked contraction this year pending details of the US-Iran arrangement to end the war. We anticipate energy circulations, tourist and financier sentiment to slowly normalise as war disruptions go away.

ANSR July GCC PRs 50DR+

The interim agreement in between the US and Iran is a significant action towards reaching a full-blown deal. A complete return to normality in the Strait of Hormuz will likely take some time, but the risk of a recession-inducing oil rate spike has declined. Worldwide GDP is expected to grow by 2.4% this year, 0.2 ppt less than we forecasted three 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 very first year of the Covid pandemic. Kuwait, Iran, Iraq and Qatar stick out as the hardest struck, owing to their inability to avoid the interruption to local shipping, war-driven facilities damage and tourism losses.

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

The financial damage sustained in the last couple of months is substantial. Saudi GDP data for Q1 showed development slowed to 3% y/y, with non-oil activities expanding by 2.9%, the weakest pace 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 disturbance hit late in the quarter.

Foreign Investment Prospects within the GCC

Aside from Oman, all GCC manufacturers as well as Iran and Iraq have actually suffered comprehensive oil and gas production losses since the start of the dispute. Might data show local 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 helped avoid an even bigger 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 years. We then anticipate a 23.5% rebound next year, driven mostly by normalisation from a seriously depressed base. Oil costs have actually been unstable, alleviating listed below $85 per barrel as the interim contract was announced.

In the medium term, we expect oil prices to be somewhat lower than our pre-war standard, as the UAE's departure from OPEC+ permits a progressive increase in its output towards the 5mn barrel per day production target as soon as trade normalises. Versus this background, the UAE will accelerate the building and construction of a brand-new West-East pipeline that need to double the capability of export through Fujairah.

The May PMI studies reported output growth reaching its greatest level in 3 months, driven mostly by enhanced domestic need. They remain below long-run averages, with weak export orders and price pressures from higher material and transportation costs are a common theme. 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 rest of the years.