Assessing GCC Market Potential for 2026

Threats are slanted to the downside. In the event of a prolonged conflict, the present impacts on the area will be compoundedthrough raised energy and food prices, declining trade, tourism and remittances, increased financial pressures, and displacement. "The existing crisis is a stark tip of the work ahead for the region: not just to weather shocks, however to restore more durable economies with more powerful macroeconomic principles, innovate and enhance governance, invest in facilities, and boost employment-creating sectors," stated.

With peace and the right action, countries can build the organizations, abilities and competitive sectors that produce opportunities for people." With this long-lasting vision in mind, the report takes a close look at the region's capacity for commercial policy government actions to increase tactical company activity as a driver of financial development and task creation.

ANSR July GCC PRs 50DR+

Federal governments in the area have actually embraced industrial policy at a high rate in the last years, often through sovereign wealth funds and state-owned business, but the results have actually been blended. The report highlights the crucial requirement for strong organizations and careful targeting of policies. "As countries face the heavy toll of the present dispute, it is necessary to also not forget the work required for long-lasting peace and success," said.

Middle East Stock Trading Patterns in 2026

Q2 2026: The ICAEW Economic Update Middle East, is a quarterly economic forecast for the area prepared directly for the finance occupation. The GCC economy faces a significant contraction this year pending details of the US-Iran contract to end the war. We expect energy circulations, tourist and financier sentiment to gradually normalise as war disruptions decrease.

ANSR July GCC PRs 50DR+

The interim arrangement between the US and Iran is a significant step towards reaching a full-blown deal. A full return to normality in the Strait of Hormuz will likely take some time, however the danger of a recession-inducing oil rate spike has actually decreased. Global GDP is anticipated to grow by 2.4% this year, 0.2 ppt less than we forecasted three months back, 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), higher than the decline in the very first year of the Covid pandemic. Kuwait, Iran, Iraq and Qatar stand apart as the hardest struck, owing to their inability to prevent the disturbance 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% decrease forecasted formerly. We anticipate Oman and Saudi Arabia to be the least adversely impacted by the fallout from the dispute, with both economies continuing to broaden this year.

The economic damage sustained in the last few months is substantial. Saudi GDP information for Q1 revealed growth slowed to 3% y/y, with non-oil activities broadening by 2.9%, the weakest pace 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 disturbance struck late in the quarter.

Advancing Industrial Success via Global Diversification

Aside from Oman, all GCC producers in addition to Iran and Iraq have actually suffered comprehensive oil and gas production losses since the start of the conflict. Might information show local production almost cut in half from pre-war levels, with the decrease 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 helped avoid an even larger plunge in output.

ANSR July GCC PRs 50DR+

Nonetheless, we forecast GCC oil sector output to agreement by 14.5% this year, which will mark the steepest decline in a number of decades. We then anticipate a 23.5% rebound next year, driven largely by normalisation from a seriously depressed base. On the other hand, oil costs have been unpredictable, reducing listed below $85 per barrel as the interim contract was announced.

In the medium term, we anticipate oil prices to be a little 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. Versus this backdrop, the UAE will accelerate the building of a brand-new West-East pipeline that need to double the capacity of export through Fujairah.

The May PMI surveys reported output development reaching its greatest level in 3 months, driven mainly by improved domestic demand. They remain below long-run averages, with weak export orders and rate pressures from greater product and transport expenses are a common theme. In general, we anticipate a 1.1% contraction in GCC non-energy sectors this year (compared to 4.2% growth pre-war) and a progressive recovery over the rest of the decade.