Securing GCC Investments against 2026 Trends

Threats are slanted to the downside. In the occasion of a prolonged conflict, the current effects on the area will be compoundedthrough raised energy and food rates, decreasing trade, tourism and remittances, increased fiscal pressures, and displacement. "The present crisis is a plain suggestion of the work ahead for the area: not just to weather shocks, however to rebuild more resilient economies with more powerful macroeconomic principles, innovate and improve governance, buy facilities, and boost employment-creating sectors," said.

With peace and the best action, countries can develop the institutions, abilities and competitive sectors that develop chances for people." With this long-lasting vision in mind, the report takes a close look at the region's capacity for industrial policy federal government actions to increase strategic service activity as a motorist of financial growth and job development.

ANSR July GCC PRs 50DR+

Federal governments in the area have actually embraced industrial policy at a high rate in the last decade, often through sovereign wealth funds and state-owned business, but the results have actually been mixed. The report highlights the critical requirement for strong institutions and careful targeting of policies. "As countries deal with the heavy toll of today conflict, it is necessary to likewise not forget the work required for lasting peace and prosperity," said.

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Q2 2026: The ICAEW Economic Update Middle East, is a quarterly economic forecast for the region prepared directly for the finance occupation. The GCC economy faces a marked contraction this year pending information of the US-Iran agreement to end the war. We anticipate energy circulations, tourism and investor sentiment to gradually normalise as war disturbances decrease.

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The interim arrangement between the US and Iran is a significant step towards reaching a full-blown offer. A complete return to normality in the Strait of Hormuz will likely take time, however the threat of a recession-inducing oil price spike has actually decreased. International GDP is expected to grow by 2.4% this year, 0.2 ppt less than we predicted 3 months ago, and 3.1% in 2027.

We anticipate a 4.1% contraction in Middle East GDP this year (versus forecasted 3.6% expansion before the war), higher than the decline in the very first year of the Covid pandemic. Kuwait, Iran, Iraq and Qatar stand out as the hardest struck, owing to their inability to avoid the interruption to regional shipping, war-driven facilities damage and tourist losses.

Our 2026 outlook for the GCC is weaker than three months ago, with GDP forecast to agreement by 2.4% compared to a 0.2% decrease forecasted formerly. We expect Oman and Saudi Arabia to be the least negatively impacted by the fallout from the conflict, with both economies continuing to broaden this year.

The financial damage sustained in the last couple of months is significant. Saudi GDP data for Q1 revealed development 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 hit late in the quarter.

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Aside from Oman, all GCC manufacturers along with Iran and Iraq have suffered extensive oil and gas production losses because the start of the dispute. Might information show regional production nearly cut in half from pre-war levels, with the decline deepening relative to March and April. Rerouting efforts, consisting of 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.

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Nevertheless, we forecast GCC oil sector output to contract 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 significantly depressed base. On the other hand, oil rates have actually been unpredictable, reducing listed below $85 per barrel as the interim agreement was announced.

In the medium term, we expect oil costs to be a little lower than our pre-war baseline, as the UAE's departure from OPEC+ permits a gradual boost in its output towards the 5mn barrel per day production target once trade normalises. Versus this backdrop, the UAE will speed up the building and construction of a brand-new West-East pipeline that should double the capability of export through Fujairah.

The May PMI surveys reported output development reaching its strongest level in three months, driven mostly by improved domestic demand. They stay listed below long-run averages, with weak export orders and cost pressures from higher product and transportation costs are a common style. Overall, we expect a 1.1% contraction in GCC non-energy sectors this year (compared to 4.2% development pre-war) and a steady healing over the remainder of the years.