International Investment Opportunities within the Middle East

Risks are tilted to the drawback. In the occasion of an extended dispute, the current effects on the area will be compoundedthrough raised energy and food costs, declining trade, tourist and remittances, increased fiscal pressures, and displacement. "The existing crisis is a stark pointer of the work ahead for the region: not just to weather shocks, but to reconstruct more resilient economies with more powerful macroeconomic fundamentals, innovate and enhance governance, purchase infrastructure, and improve employment-creating sectors," stated.

With peace and the ideal action, countries can construct the organizations, capabilities and competitive sectors that produce opportunities for people." With this long-term vision in mind, the report takes a close take a look at the area's capacity for industrial policy federal government actions to increase strategic service activity as a motorist of economic growth and task creation.

ANSR July GCC PRs 50DR+

Governments in the region have actually embraced industrial policy at a high rate in the last years, often through sovereign wealth funds and state-owned business, but the results have actually been mixed. The report highlights the critical requirement for strong organizations and cautious targeting of policies. "As countries deal with the heavy toll of today conflict, it is essential to also not lose sight of the work needed for lasting peace and success," stated.

Securing Middle East Portfolios for 2026 Trends

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

ANSR July GCC PRs 50DR+

The interim arrangement in between the US and Iran is a considerable step towards reaching a full-blown deal. A full return to normality in the Strait of Hormuz will likely require time, but the risk of a recession-inducing oil cost spike has decreased. International GDP is expected to grow by 2.4% this year, 0.2 ppt less than we forecasted 3 months earlier, 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), higher than the decline in the first year of the Covid pandemic. Kuwait, Iran, Iraq and Qatar stand out as the hardest hit, owing to their inability to prevent the disruption to local shipping, war-driven facilities damage and tourist losses.

Our 2026 outlook for the GCC is weaker than 3 months ago, with GDP projection to agreement 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 significant. Saudi GDP information for Q1 revealed growth slowed to 3% y/y, with non-oil activities expanding by 2.9%, the weakest pace 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 struck late in the quarter.

Foreign Capital Prospects within the GCC

Aside from Oman, all GCC producers along with Iran and Iraq have suffered comprehensive oil and gas production losses since the start of the conflict. Might data show local production almost halved 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 avoid an even larger plunge in output.

ANSR July GCC PRs 50DR+

Nevertheless, 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 mainly by normalisation from a seriously depressed base. Meanwhile, oil costs have been unpredictable, alleviating listed below $85 per barrel as the interim contract was revealed.

In the medium term, we expect oil rates to be somewhat lower than our pre-war baseline, as the UAE's departure from OPEC+ permits a gradual boost in its output towards the 5mn barrel per day production target when trade normalises. Against this background, the UAE will speed up the building of a new West-East pipeline that should double the capacity of export through Fujairah.

The May PMI surveys reported output development reaching its greatest level in 3 months, driven largely by improved domestic need. They stay listed below long-run averages, with weak export orders and cost pressures from higher material and transportation costs are a common style. Overall, we anticipate 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 decade.