2026 GCC Market Projections

Risks are slanted to the drawback. In the event of a prolonged dispute, the current impacts on the region will be compoundedthrough elevated energy and food prices, declining trade, tourism and remittances, increased fiscal pressures, and displacement. "The existing crisis is a plain tip of the work ahead for the region: not only to weather shocks, but to rebuild more durable economies with stronger macroeconomic principles, innovate and improve governance, invest in facilities, and boost employment-creating sectors," said.

With peace and the right action, nations can build the institutions, capabilities and competitive sectors that produce chances for individuals." With this long-term vision in mind, the report takes a close appearance at the region's potential for industrial policy government actions to increase strategic business activity as a motorist of financial development and task development.

ANSR July GCC PRs 50DR+

Federal governments in the area have actually adopted industrial policy at a high rate in the last years, frequently through sovereign wealth funds and state-owned business, however the results have been blended. The report highlights the crucial need for strong institutions and cautious targeting of policies. "As countries deal with the heavy toll of the present dispute, it is important to likewise not lose sight of the work needed for long-lasting peace and prosperity," said.

Strategic Capital Shifts in 2026

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 faces a marked contraction this year pending details of the US-Iran agreement to end the war. We anticipate energy circulations, tourism and financier belief to gradually normalise as war disturbances decrease.

ANSR July GCC PRs 50DR+

The interim agreement in between the United States and Iran is a substantial step towards reaching a full-blown offer. A full go back to normality in the Strait of Hormuz will likely require time, however the threat of a recession-inducing oil rate spike has declined. International GDP is expected to grow by 2.4% this year, 0.2 ppt less than we projected three months ago, 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 apart as the hardest struck, owing to their inability to avoid the disturbance to local shipping, war-driven infrastructure damage and tourism losses.

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

The financial damage sustained in the last few months is substantial. Saudi GDP information for Q1 showed development slowed to 3% y/y, with non-oil activities broadening 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 disruption struck late in the quarter.

Middle East Stock Market Trends for 2026

Aside from Oman, all GCC producers along with Iran and Iraq have actually suffered comprehensive oil and gas production losses given that the start of the conflict. Might information reveal 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 helped prevent an even larger 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 decrease in numerous decades. We then expect a 23.5% rebound next year, driven largely by normalisation from a severely depressed base. On the other hand, oil prices have actually been unstable, reducing below $85 per barrel as the interim agreement was revealed.

In the medium term, we anticipate oil costs to be somewhat lower than our pre-war baseline, as the UAE's departure from OPEC+ permits a steady boost in its output towards the 5mn barrel each day production target as soon as trade normalises. Versus this backdrop, the UAE will speed up the construction of a new West-East pipeline that need to double the capacity of export through Fujairah.

The May PMI surveys reported output growth 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 cost pressures from greater product and transportation costs are a common 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.