Strategic Capital Diversification in 2026

Dangers are slanted to the disadvantage. In case of an extended conflict, the current influence on the region will be compoundedthrough elevated energy and food costs, declining trade, tourism and remittances, increased fiscal pressures, and displacement. "The existing crisis is a plain tip of the work ahead for the region: not only to weather shocks, but to restore more resilient economies with stronger macroeconomic fundamentals, innovate and enhance governance, invest in infrastructure, and enhance employment-creating sectors," said.

With peace and the ideal action, countries can develop the organizations, capabilities and competitive sectors that develop opportunities for individuals." With this long-term vision in mind, the report takes a close look at the region's potential for commercial policy government actions to increase tactical organization activity as a chauffeur of financial development and job creation.

ANSR July GCC PRs 50DR+

Federal governments in the region have actually adopted industrial policy at a high rate in the last years, often through sovereign wealth funds and state-owned enterprises, but the results have been mixed. The report highlights the important requirement for strong organizations and cautious targeting of policies. "As nations face the heavy toll of the present conflict, it is very important to also not lose sight of the work required for lasting peace and prosperity," said.

Middle East Equity Trading Patterns in 2026

Q2 2026: The ICAEW Economic Update Middle East, is a quarterly financial forecast for the area prepared straight for the financing profession. The GCC economy faces a significant contraction this year pending details of the US-Iran contract to end the war. We expect energy circulations, tourism and financier sentiment to gradually normalise as war disruptions decrease.

ANSR July GCC PRs 50DR+

The interim arrangement between the US and Iran is a considerable action towards reaching a full-blown offer. A full go back to normality in the Strait of Hormuz will likely take time, but the threat of a recession-inducing oil price spike has actually decreased. Global GDP is expected to grow by 2.4% this year, 0.2 ppt less than we projected three months back, 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 decrease in the very first year of the Covid pandemic. Kuwait, Iran, Iraq and Qatar stick out as the hardest hit, owing to their inability to avoid the disturbance to local shipping, war-driven facilities damage and tourism losses.

Our 2026 outlook for the GCC is weaker than 3 months back, with GDP forecast to contract by 2.4% compared to a 0.2% decrease projected formerly. We anticipate 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 financial damage incurred in the last few months is considerable. Saudi GDP data for Q1 revealed 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 changed 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.

The Future Business Landscape in the GCC

Aside from Oman, all GCC producers in addition to Iran and Iraq have suffered comprehensive oil and gas production losses since the start of the dispute. May data reveal regional production nearly cut in half 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 avoid an even bigger plunge in output.

ANSR July GCC PRs 50DR+

However, we forecast GCC oil sector output to contract by 14.5% this year, which will mark the steepest decline in numerous decades. We then anticipate a 23.5% rebound next year, driven mostly by normalisation from a severely depressed base. On the other hand, oil costs have actually been unstable, easing below $85 per barrel as the interim contract was revealed.

In the medium term, we anticipate oil prices to be a little lower than our pre-war standard, as the UAE's departure from OPEC+ permits a progressive boost in its output towards the 5mn barrel daily production target when trade normalises. Versus this background, the UAE will accelerate the construction of a new West-East pipeline that ought to double the capability of export through Fujairah.

The May PMI studies reported output development reaching its strongest level in 3 months, driven mostly by improved domestic need. However, they remain below long-run averages, with weak export orders and cost pressures from higher product and transportation expenses are a typical theme. Overall, 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 rest of the years.