GCC Stock Market Patterns for 2026

Threats are tilted to the disadvantage. In case of a prolonged dispute, the present influence on the area will be compoundedthrough elevated energy and food prices, decreasing trade, tourism and remittances, increased financial pressures, and displacement. "The current crisis is a plain tip of the work ahead for the area: not just to weather shocks, however to restore more durable economies with more powerful macroeconomic basics, innovate and improve governance, buy infrastructure, and increase employment-creating sectors," said.

With peace and the right action, nations can construct the organizations, capabilities and competitive sectors that develop opportunities for people." 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 company activity as a motorist of financial development and task development.

ANSR July GCC PRs 50DR+

Governments in the region have actually embraced industrial policy at a high rate in the last years, typically through sovereign wealth funds and state-owned business, but the outcomes have been mixed. The report highlights the critical requirement for strong institutions and cautious targeting of policies. "As nations face the heavy toll of today conflict, it is necessary to likewise not lose sight of the work needed for lasting peace and prosperity," stated.

How Industrial Shifts Can Transform Arabian Markets

Q2 2026: The ICAEW Economic Update Middle East, is a quarterly economic projection for the region prepared straight for the financing profession. The GCC economy faces a marked contraction this year pending details of the US-Iran contract to end the war. We expect energy flows, tourist and investor sentiment to slowly normalise as war interruptions go away.

ANSR July GCC PRs 50DR+

The interim contract between the United States and Iran is a substantial action towards reaching a full-blown offer. A full return to normality in the Strait of Hormuz will likely take time, however the risk 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 anticipate a 4.1% contraction in Middle East GDP this year (versus forecasted 3.6% growth before the war), greater than the decrease in the very first year of the Covid pandemic. Kuwait, Iran, Iraq and Qatar stand out as the hardest hit, owing to their failure to avoid the interruption 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 agreement by 2.4% compared to a 0.2% decline projected formerly. We expect Oman and Saudi Arabia to be the least adversely affected by the fallout from the conflict, with both economies continuing to broaden this year.

The economic damage sustained in the last couple of 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 pace since 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 hit late in the quarter.

The Future Business Climate in Arabia

Aside from Oman, all GCC manufacturers as well as Iran and Iraq have suffered comprehensive oil and gas production losses considering that the start of the conflict. Might data show local production almost 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 prevent an even bigger plunge in output.

ANSR July GCC PRs 50DR+

We anticipate GCC oil sector output to agreement by 14.5% this year, which will mark the steepest decrease in a number of decades. We then anticipate a 23.5% rebound next year, driven mostly by normalisation from a severely depressed base. Oil prices have been unstable, reducing below $85 per barrel as the interim agreement was revealed.

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 steady boost in its output towards the 5mn barrel daily production target once trade normalises. Versus this background, the UAE will accelerate the construction of a brand-new West-East pipeline that ought to double the capability of export through Fujairah.

The May PMI surveys reported output development reaching its strongest level in 3 months, driven largely by improved domestic need. They remain listed below long-run averages, with weak export orders and price pressures from higher 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% development pre-war) and a progressive recovery over the remainder of the years.