Foreign Investment Prospects within the GCC

Dangers are slanted to the downside. In the occasion of a prolonged dispute, the current effect on the area will be compoundedthrough raised energy and food costs, decreasing trade, tourist and remittances, increased financial pressures, and displacement. "The current crisis is a stark pointer of the work ahead for the region: not just to weather shocks, but to rebuild more resistant economies with stronger macroeconomic principles, innovate and improve governance, purchase infrastructure, and improve employment-creating sectors," said.

With peace and the ideal action, countries can develop the institutions, capabilities and competitive sectors that produce chances for individuals." With this long-lasting vision in mind, the report takes a close appearance at the region's capacity for industrial policy federal government actions to increase strategic company activity as a chauffeur of economic development and task creation.

ANSR July GCC PRs 50DR+

Federal governments in the area have embraced commercial policy at a high rate in the last years, typically through sovereign wealth funds and state-owned business, but the outcomes have been mixed. The report highlights the important need for strong organizations and careful targeting of policies. "As nations deal with the heavy toll of the present dispute, it is important to likewise not forget the work required for lasting peace and success," said.

Global Investment Prospects within the Middle East

Q2 2026: The ICAEW Economic Update Middle East, is a quarterly financial projection for the region prepared directly for the finance profession. The GCC economy deals with a marked contraction this year pending information of the US-Iran arrangement to end the war. We anticipate energy flows, tourist and financier sentiment to gradually normalise as war interruptions diminish.

ANSR July GCC PRs 50DR+

The interim agreement in between the US and Iran is a considerable action towards reaching a full-blown deal. A full go back to normality in the Strait of Hormuz will likely require time, however the risk of a recession-inducing oil rate spike has decreased. International GDP is anticipated to grow by 2.4% this year, 0.2 ppt less than we forecasted three 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), greater than the decline in the first year of the Covid pandemic. Kuwait, Iran, Iraq and Qatar stand out as the hardest struck, owing to their inability to prevent the interruption 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% decline predicted previously. We anticipate Oman and Saudi Arabia to be the least negatively affected by the fallout from the conflict, with both economies continuing to expand this year.

The financial damage incurred in the last couple of months is considerable. Saudi GDP data for Q1 showed growth 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.

Why Economic Shifts Can Transform Arabian Markets

Aside from Oman, all GCC manufacturers as well as Iran and Iraq have suffered substantial oil and gas production losses since the start of the dispute. May information show local 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 actually assisted prevent an even larger plunge in output.

ANSR July GCC PRs 50DR+

Nevertheless, we forecast GCC oil sector output to agreement by 14.5% this year, which will mark the steepest decrease in a number of years. We then anticipate a 23.5% rebound next year, driven largely by normalisation from a severely depressed base. On the other hand, oil costs have actually been unstable, alleviating below $85 per barrel as the interim contract was revealed.

In the medium term, we expect oil rates to be a little lower than our pre-war standard, as the UAE's departure from OPEC+ enables a steady increase in its output towards the 5mn barrel daily production target when trade normalises. Against this backdrop, the UAE will speed up the building and construction of a brand-new West-East pipeline that ought to double the capability of export through Fujairah.

The May PMI surveys reported output growth reaching its greatest level in three months, driven largely by improved domestic need. They stay listed below long-run averages, with weak export orders and price pressures from higher material and transport costs are a common 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 progressive healing over the remainder of the years.