2026 GCC Financial Projections

Risks are tilted to the disadvantage. In the event of an extended conflict, the present influence on the area will be compoundedthrough raised energy and food prices, decreasing trade, tourist and remittances, increased financial pressures, and displacement. "The existing crisis is a stark reminder of the work ahead for the area: not only to weather shocks, but to reconstruct more durable economies with more powerful macroeconomic fundamentals, innovate and enhance governance, invest in infrastructure, and improve employment-creating sectors," stated.

With peace and the best action, countries can build the organizations, capabilities and competitive sectors that develop opportunities for people." With this long-term vision in mind, the report takes a close take a look at the region's capacity for commercial policy government actions to increase strategic company activity as a motorist of financial development and job creation.

ANSR July GCC PRs 50DR+

Governments in the region have adopted industrial policy at a high rate in the last decade, often through sovereign wealth funds and state-owned business, however the results have been mixed. The report highlights the vital requirement for strong organizations and careful targeting of policies. "As nations face the heavy toll of the present dispute, it is essential to likewise not lose sight of the work required for lasting peace and success," said.

Evaluating Regional Market Potential for 2026

Q2 2026: The ICAEW Economic Update Middle East, is a quarterly financial forecast for the area prepared directly for the financing profession. The GCC economy deals with a significant contraction this year pending information of the US-Iran arrangement to end the war. We anticipate energy circulations, tourism and investor sentiment to gradually normalise as war interruptions diminish.

ANSR July GCC PRs 50DR+

The interim arrangement between the United States and Iran is a considerable step towards reaching a full-blown deal. A full go back to normality in the Strait of Hormuz will likely take time, however the danger of a recession-inducing oil price spike has decreased. International GDP is anticipated to grow by 2.4% this year, 0.2 ppt less than we forecasted 3 months ago, and 3.1% in 2027.

We anticipate a 4.1% contraction in Middle East GDP this year (versus predicted 3.6% growth before the war), higher than the decrease in the first year of the Covid pandemic. Kuwait, Iran, Iraq and Qatar stand apart as the hardest hit, owing to their failure to prevent the disturbance to regional 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% decline forecasted previously. We expect Oman and Saudi Arabia to be the least negatively affected by the fallout from the dispute, with both economies continuing to broaden this year.

The financial damage incurred in the last couple of months is considerable. Saudi GDP information for Q1 revealed development slowed to 3% y/y, with non-oil activities broadening by 2.9%, the weakest rate 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 disturbance struck late in the quarter.

Essential Stock Capital Strategies for Regional Investors

Aside from Oman, all GCC manufacturers in addition to Iran and Iraq have actually suffered comprehensive oil and gas production losses given that the start of the conflict. Might information show local production nearly 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 avoid an even larger plunge in output.

ANSR July GCC PRs 50DR+

Nevertheless, we forecast GCC oil sector output to contract by 14.5% this year, which will mark the steepest decline in several decades. We then anticipate a 23.5% rebound next year, driven mainly by normalisation from a severely depressed base. On the other hand, oil costs have been unstable, easing 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+ enables a steady increase in its output towards the 5mn barrel each day production target once trade normalises. Versus this backdrop, the UAE will accelerate the building and construction of a new West-East pipeline that ought to double the capacity of export through Fujairah.

The May PMI studies reported output development reaching its strongest level in three months, driven largely by improved domestic demand. However, they remain below long-run averages, with weak export orders and price pressures from higher material and transportation expenses 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 gradual healing over the remainder of the decade.