How Industrial Shifts Can Transform GCC Markets

Threats are slanted to the disadvantage. In the occasion of an extended conflict, the existing effects on the region will be compoundedthrough elevated energy and food costs, decreasing trade, tourist and remittances, increased fiscal pressures, and displacement. "The existing crisis is a plain suggestion of the work ahead for the region: not only to weather shocks, but to restore more durable economies with more powerful macroeconomic basics, innovate and enhance governance, buy infrastructure, and increase employment-creating sectors," said.

With peace and the best action, countries can develop the organizations, capabilities and competitive sectors that develop chances for people." With this long-term vision in mind, the report takes a close look at the area's potential for commercial policy government actions to increase tactical business activity as a driver of financial growth and job production.

ANSR July GCC PRs 50DR+

Governments in the area have actually adopted industrial policy at a high rate in the last years, typically through sovereign wealth funds and state-owned business, however the results have actually been blended. The report highlights the vital need for strong institutions and mindful targeting of policies. "As nations deal with the heavy toll of the present dispute, it is essential to also not forget the work needed for long-lasting peace and success," said.

Middle East Stock Market Patterns for 2026

Q2 2026: The ICAEW Economic Update Middle East, is a quarterly financial projection for the area prepared directly for the financing occupation. 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 investor belief to gradually normalise as war disruptions go away.

ANSR July GCC PRs 50DR+

The interim contract in between the US and Iran is a significant step towards reaching a full-blown offer. A full return to normality in the Strait of Hormuz will likely take time, but the threat of a recession-inducing oil cost spike has actually declined. Global GDP is anticipated to grow by 2.4% this year, 0.2 ppt less than we projected 3 months earlier, and 3.1% in 2027.

We forecast a 4.1% contraction in Middle East GDP this year (versus forecasted 3.6% expansion before the war), greater 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 failure to avoid the disturbance to local shipping, war-driven facilities damage and tourist losses.

Our 2026 outlook for the GCC is weaker than 3 months ago, with GDP forecast to contract by 2.4% compared to a 0.2% decline forecasted formerly. We anticipate 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 sustained 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 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 disturbance struck late in the quarter.

Navigating Wealth Diversification in a Global Economy

Aside from Oman, all GCC manufacturers as well as Iran and Iraq have suffered comprehensive oil and gas production losses considering that the start of the dispute. May information show local production nearly cut in half from pre-war levels, with the decline 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 anticipate GCC oil sector output to agreement by 14.5% this year, which will mark the steepest decline in several years. We then expect a 23.5% rebound next year, driven mostly by normalisation from a severely depressed base. Oil prices have actually been volatile, easing listed below $85 per barrel as the interim contract was announced.

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

The May PMI surveys reported output growth reaching its greatest level in 3 months, driven mostly by improved domestic need. However, they remain below long-run averages, with weak export orders and rate pressures from greater product and transport expenses are a common style. Overall, we anticipate a 1.1% contraction in GCC non-energy sectors this year (compared to 4.2% growth pre-war) and a steady recovery over the remainder of the decade.