Future-Proofing GCC Investments against 2026 Shifts

Dangers are tilted to the disadvantage. In the occasion of a prolonged conflict, the existing influence on the region will be compoundedthrough elevated energy and food rates, decreasing trade, tourism and remittances, increased fiscal pressures, and displacement. "The existing crisis is a stark tip of the work ahead for the area: not only to weather shocks, but to rebuild more resistant economies with more powerful macroeconomic basics, innovate and enhance governance, buy infrastructure, and boost employment-creating sectors," stated.

With peace and the ideal action, nations can develop the organizations, abilities and competitive sectors that develop 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 government actions to increase tactical service activity as a chauffeur of economic growth and job production.

ANSR July GCC PRs 50DR+

Governments in the area have embraced commercial policy at a high rate in the last decade, typically through sovereign wealth funds and state-owned business, however the results have been mixed. The report highlights the vital need for strong institutions and careful targeting of policies. "As countries deal with the heavy toll of the present dispute, it is very important to also not forget the work needed for long-lasting peace and prosperity," stated.

Future-Proofing GCC Investments for 2026 Trends

Q2 2026: The ICAEW Economic Update Middle East, is a quarterly financial forecast for the region prepared straight for the financing occupation. The GCC economy deals with a marked contraction this year pending information of the US-Iran arrangement to end the war. We expect energy circulations, tourism and investor sentiment to slowly normalise as war disturbances decrease.

ANSR July GCC PRs 50DR+

The interim arrangement between the United States and Iran is a considerable step towards reaching a full-blown offer. A full go back to normality in the Strait of Hormuz will likely take some time, but the threat of a recession-inducing oil price spike has declined. International GDP is expected to grow by 2.4% this year, 0.2 ppt less than we predicted 3 months back, and 3.1% in 2027.

We anticipate a 4.1% contraction in Middle East GDP this year (versus projected 3.6% expansion before the war), higher than the decrease in the first year of the Covid pandemic. Kuwait, Iran, Iraq and Qatar stand apart as the hardest struck, owing to their failure to prevent the disturbance to local shipping, war-driven facilities damage and tourism losses.

Our 2026 outlook for the GCC is weaker than 3 months earlier, with GDP forecast to agreement by 2.4% compared to a 0.2% decline projected previously. We anticipate 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 economic damage sustained in the last couple of months is substantial. 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 adjusted basis, GDP contracted 1.2% q/q, driven by a 6.8% fall in oil activities as the Strait of Hormuz interruption struck late in the quarter.

Key International Capital Prospects in the GCC Market

Aside from Oman, all GCC producers in addition to Iran and Iraq have suffered substantial oil and gas production losses because the start of the dispute. May data reveal regional production nearly halved from pre-war levels, with the decrease 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 larger plunge in output.

ANSR July GCC PRs 50DR+

Nonetheless, we forecast GCC oil sector output to contract by 14.5% this year, which will mark the steepest decline in a number of years. We then anticipate a 23.5% rebound next year, driven largely by normalisation from a seriously depressed base. Oil prices have actually been unpredictable, relieving below $85 per barrel as the interim arrangement was revealed.

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

The May PMI studies reported output development reaching its greatest level in 3 months, driven largely by enhanced domestic demand. They stay listed below long-run averages, with weak export orders and rate pressures from greater product and transport costs 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 remainder of the decade.