Upcoming GCC Financial Projections

Threats are tilted to the downside. In case of an extended conflict, the current effects on the region will be compoundedthrough raised energy and food costs, declining trade, tourism and remittances, increased fiscal pressures, and displacement. "The current crisis is a stark suggestion of the work ahead for the region: not just to weather shocks, but to restore more resilient economies with stronger macroeconomic fundamentals, innovate and enhance governance, buy infrastructure, and increase employment-creating sectors," stated.

With peace and the best action, nations can construct the institutions, capabilities and competitive sectors that produce chances for people." With this long-lasting vision in mind, the report takes a close take a look at the area's potential for commercial policy government actions to increase strategic company activity as a driver of financial growth 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 decade, often through sovereign wealth funds and state-owned enterprises, but the results have actually been blended. The report highlights the critical 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 long-lasting peace and success," said.

Essential Stock Market Strategies for Regional Growth

Q2 2026: The ICAEW Economic Update Middle East, is a quarterly economic projection for the area prepared straight for the financing occupation. The GCC economy faces a marked contraction this year pending details of the US-Iran agreement to end the war. We anticipate energy flows, tourist and investor sentiment to slowly normalise as war disruptions subside.

ANSR July GCC PRs 50DR+

The interim agreement in between the US and Iran is a considerable action towards reaching a full-blown offer. A complete return to normality in the Strait of Hormuz will likely require time, but the danger 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 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), greater than the decrease in the very first year of the Covid pandemic. Kuwait, Iran, Iraq and Qatar stand out as the hardest struck, owing to their failure to avoid the disturbance to regional shipping, war-driven infrastructure damage and tourism losses.

Our 2026 outlook for the GCC is weaker than 3 months back, with GDP projection to contract 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 broaden this year.

The economic damage sustained in the last few months is considerable. Saudi GDP data for Q1 revealed development slowed to 3% y/y, with non-oil activities expanding by 2.9%, the weakest rate because 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.

Driving Non-Oil Success through Strategic Diversification

Aside from Oman, all GCC producers along with Iran and Iraq have suffered extensive oil and gas production losses since the start of the conflict. May data reveal local production almost 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 bigger plunge in output.

ANSR July GCC PRs 50DR+

We anticipate 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 significantly depressed base. Oil prices have been volatile, alleviating listed below $85 per barrel as the interim arrangement was announced.

In the medium term, we expect oil rates to be somewhat lower than our pre-war standard, as the UAE's departure from OPEC+ enables a progressive increase in its output towards the 5mn barrel daily production target as soon as trade normalises. Against this background, the UAE will accelerate 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 three months, driven mainly by improved domestic demand. Nevertheless, they remain below long-run averages, with weak export orders and price pressures from greater material and transport costs are a typical theme. In general, we expect a 1.1% contraction in GCC non-energy sectors this year (compared to 4.2% development pre-war) and a gradual recovery over the rest of the years.