Evaluating GCC Investment Potential in 2026

Threats are slanted to the disadvantage. In case of an extended conflict, the existing effect on the area will be compoundedthrough raised energy and food prices, declining trade, tourism and remittances, increased fiscal pressures, and displacement. "The present crisis is a plain tip of the work ahead for the region: not only to weather shocks, however to restore more resilient economies with stronger macroeconomic basics, innovate and enhance governance, purchase facilities, and increase employment-creating sectors," stated.

With peace and the best action, nations can build the organizations, abilities and competitive sectors that develop opportunities for individuals." With this long-lasting vision in mind, the report takes a close take a look at the region's capacity for commercial policy government actions to increase tactical service activity as a motorist of financial development and task production.

ANSR July GCC PRs 50DR+

Federal governments in the area have adopted commercial policy at a high rate in the last years, frequently through sovereign wealth funds and state-owned business, however the results have been mixed. The report highlights the crucial need for strong institutions and mindful targeting of policies. "As countries deal with the heavy toll of today dispute, it is necessary to likewise not forget the work required for long-lasting peace and success," said.

Top Foreign Investment Avenues for the GCC Market

Q2 2026: The ICAEW Economic Update Middle East, is a quarterly financial projection for the area prepared directly for the financing profession. The GCC economy deals with a marked contraction this year pending information of the US-Iran contract to end the war. We anticipate energy flows, tourist and investor sentiment to gradually normalise as war disruptions diminish.

ANSR July GCC PRs 50DR+

The interim contract between the US and Iran is a considerable action towards reaching a full-blown offer. A full return to normality in the Strait of Hormuz will likely require time, however the threat of a recession-inducing oil price spike has actually declined. Global GDP is expected to grow by 2.4% this year, 0.2 ppt less than we projected 3 months ago, and 3.1% in 2027.

We forecast a 4.1% contraction in Middle East GDP this year (versus projected 3.6% growth before the war), higher than the decline in the very first year of the Covid pandemic. Kuwait, Iran, Iraq and Qatar stand apart as the hardest struck, owing to their failure to prevent the disruption to regional shipping, war-driven infrastructure damage and tourism losses.

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

The economic damage sustained in the last couple of months is significant. Saudi GDP data for Q1 showed growth slowed to 3% y/y, with non-oil activities broadening by 2.9%, the weakest speed considering that the Covid pandemic. On a seasonally adjusted 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.

Evaluating Regional Investment Potential for 2026

Aside from Oman, all GCC producers as well as Iran and Iraq have actually suffered comprehensive oil and gas production losses given that the start of the conflict. May 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 several decades. We then expect a 23.5% rebound next year, driven mostly by normalisation from a severely depressed base. Oil rates have been volatile, alleviating listed below $85 per barrel as the interim agreement was announced.

In the medium term, we expect oil rates to be slightly lower than our pre-war standard, as the UAE's departure from OPEC+ enables a gradual increase in its output towards the 5mn barrel each day production target as soon as trade normalises. Versus this backdrop, the UAE will accelerate the building of a brand-new West-East pipeline that must double the capacity of export through Fujairah.

The May PMI surveys reported output development reaching its greatest level in 3 months, driven mainly by improved domestic demand. They stay listed below long-run averages, with weak export orders and price pressures from higher product and transport costs are a typical theme. Overall, we expect a 1.1% contraction in GCC non-energy sectors this year (compared to 4.2% growth pre-war) and a gradual healing over the rest of the decade.