Key International Capital Avenues in the GCC Market

Threats are slanted to the disadvantage. In case of an extended dispute, the present effects 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 pointer of the work ahead for the region: not only to weather shocks, but to reconstruct more resilient economies with more powerful macroeconomic fundamentals, innovate and improve governance, purchase infrastructure, and increase employment-creating sectors," said.

With peace and the right action, countries can construct the institutions, capabilities and competitive sectors that create chances 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 tactical business activity as a motorist of financial development and job creation.

ANSR July GCC PRs 50DR+

Governments in the region have adopted industrial policy at a high rate in the last decade, typically through sovereign wealth funds and state-owned business, however the outcomes have been mixed. The report highlights the crucial need for strong institutions and cautious targeting of policies. "As countries deal with the heavy toll of the present conflict, it is necessary to likewise not forget the work needed for long-lasting peace and success," said.

Securing Middle East Investments for 2026 Shifts

Q2 2026: The ICAEW Economic Update Middle East, is a quarterly economic forecast for the region prepared directly for the finance profession. The GCC economy deals with a significant contraction this year pending information of the US-Iran contract to end the war. We expect energy circulations, tourist and financier belief to slowly normalise as war interruptions go away.

ANSR July GCC PRs 50DR+

The interim arrangement between the US and Iran is a considerable step towards reaching a full-blown deal. A complete go back to normality in the Strait of Hormuz will likely take some time, however the risk of a recession-inducing oil cost spike has declined. Global GDP is expected to grow by 2.4% this year, 0.2 ppt less than we predicted three months earlier, and 3.1% in 2027.

We anticipate a 4.1% contraction in Middle East GDP this year (versus predicted 3.6% growth before the war), higher than the decline 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 interruption to local 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 predicted formerly. We anticipate Oman and Saudi Arabia to be the least negatively affected by the fallout from the conflict, with both economies continuing to broaden this year.

The financial damage sustained in the last few months is significant. Saudi GDP data for Q1 showed development slowed to 3% y/y, with non-oil activities broadening by 2.9%, the weakest rate since 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.

Why Economic Shifts Will Transform GCC Markets

Aside from Oman, all GCC producers in addition to Iran and Iraq have actually suffered substantial 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, consisting of 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+

However, we forecast GCC oil sector output to agreement by 14.5% this year, which will mark the steepest decline in numerous decades. We then expect a 23.5% rebound next year, driven mostly by normalisation from a badly depressed base. Meanwhile, oil rates have been unstable, reducing below $85 per barrel as the interim agreement was revealed.

In the medium term, we anticipate oil rates to be somewhat lower than our pre-war standard, as the UAE's departure from OPEC+ enables a gradual increase in its output towards the 5mn barrel per day production target as soon as trade normalises. Against 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 surveys reported output development reaching its greatest level in 3 months, driven mostly by enhanced domestic demand. They stay listed below long-run averages, with weak export orders and rate pressures from greater product and transportation expenses are a typical style. In general, we expect a 1.1% contraction in GCC non-energy sectors this year (compared to 4.2% growth pre-war) and a progressive healing over the rest of the years.