Mastering Wealth Strategies in a 2026 Economy

Dangers are slanted to the disadvantage. In case of an extended dispute, the present impacts on the region will be compoundedthrough raised energy and food prices, declining trade, tourist and remittances, increased financial pressures, and displacement. "The present crisis is a plain pointer of the work ahead for the area: not only to weather shocks, however to reconstruct more durable economies with more powerful macroeconomic principles, innovate and enhance governance, purchase infrastructure, and improve employment-creating sectors," stated.

With peace and the right action, countries can develop the institutions, 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 area's capacity for commercial policy government actions to increase strategic service activity as a driver of economic growth and job production.

ANSR July GCC PRs 50DR+

Federal governments in the area have actually adopted industrial policy at a high rate in the last years, often through sovereign wealth funds and state-owned business, but the outcomes have been blended. The report highlights the important need for strong organizations and cautious targeting of policies. "As countries face the heavy toll of today conflict, it is very important to also not forget the work needed for lasting peace and prosperity," said.

Evaluating GCC Investment Potential in 2026

Q2 2026: The ICAEW Economic Update Middle East, is a quarterly financial forecast 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 expect energy flows, tourist and financier sentiment to slowly normalise as war interruptions subside.

ANSR July GCC PRs 50DR+

The interim agreement in between the US and Iran is a substantial step towards reaching a full-blown offer. A complete return to normality in the Strait of Hormuz will likely take some time, but the risk of a recession-inducing oil rate spike has actually 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 forecast 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 stick out as the hardest struck, owing to their inability to prevent the interruption to regional shipping, war-driven infrastructure damage and tourism losses.

Our 2026 outlook for the GCC is weaker than 3 months ago, with GDP projection to contract by 2.4% compared to a 0.2% decline predicted previously. We expect Oman and Saudi Arabia to be the least adversely impacted by the fallout from the conflict, with both economies continuing to expand this year.

The financial damage incurred in the last few months is considerable. Saudi GDP data for Q1 showed development slowed to 3% y/y, with non-oil activities expanding by 2.9%, the weakest rate because 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 disruption hit late in the quarter.

Essential Industrial Diversification for the Future

Aside from Oman, all GCC manufacturers along with Iran and Iraq have actually suffered extensive oil and gas production losses since the start of the dispute. May data reveal 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 helped avoid an even bigger 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 numerous decades. We then anticipate a 23.5% rebound next year, driven mostly by normalisation from a seriously depressed base. Oil rates have been volatile, alleviating listed below $85 per barrel as the interim arrangement was announced.

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 gradual increase 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 building of a brand-new West-East pipeline that need to double the capability of export through Fujairah.

The May PMI surveys reported output growth reaching its strongest level in 3 months, driven mainly by improved domestic need. They remain below long-run averages, with weak export orders and cost 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% development pre-war) and a progressive healing over the rest of the years.