Key Equity Capital Insights for Regional Investors

Risks are slanted to the drawback. In the occasion of an extended conflict, the present effect on the region will be compoundedthrough raised energy and food costs, declining trade, tourist and remittances, increased financial pressures, and displacement. "The present crisis is a plain suggestion of the work ahead for the area: not just to weather shocks, but to rebuild more resistant economies with stronger macroeconomic basics, innovate and improve governance, purchase facilities, and improve employment-creating sectors," said.

With peace and the ideal action, nations can build the institutions, capabilities and competitive sectors that develop opportunities for individuals." With this long-term vision in mind, the report takes a close take a look at the region's capacity for commercial policy federal government actions to increase tactical service activity as a chauffeur of economic growth and task production.

ANSR July GCC PRs 50DR+

Federal governments in the area have adopted commercial policy at a high rate in the last decade, frequently through sovereign wealth funds and state-owned business, however the results have been blended. The report highlights the important need for strong institutions and mindful targeting of policies. "As countries deal with the heavy toll of today conflict, it is very important to also not forget the work required for long-lasting peace and prosperity," said.

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Q2 2026: The ICAEW Economic Update Middle East, is a quarterly financial forecast for the area prepared straight for the financing occupation. The GCC economy deals with a significant contraction this year pending information of the US-Iran agreement to end the war. We expect energy flows, tourism and financier belief to gradually normalise as war interruptions subside.

ANSR July GCC PRs 50DR+

The interim contract in between the US and Iran is a considerable action towards reaching a full-blown offer. A complete return to normality in the Strait of Hormuz will likely take time, but the danger of a recession-inducing oil price spike has declined. International GDP is expected 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% growth before the war), higher than the decrease in the very first year of the Covid pandemic. Kuwait, Iran, Iraq and Qatar stand apart as the hardest struck, owing to their failure to prevent the disturbance to local shipping, war-driven infrastructure damage and tourist losses.

Our 2026 outlook for the GCC is weaker than three months ago, with GDP projection to agreement 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 incurred in the last couple of months is significant. Saudi GDP information for Q1 showed growth slowed to 3% y/y, with non-oil activities broadening by 2.9%, the weakest rate given that 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 interruption hit late in the quarter.

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Aside from Oman, all GCC manufacturers as well as Iran and Iraq have actually suffered extensive oil and gas production losses considering that the start of the dispute. Might information show local production almost 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 avoid an even bigger 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 expect a 23.5% rebound next year, driven mainly by normalisation from a seriously depressed base. Oil rates have actually been unpredictable, relieving listed below $85 per barrel as the interim contract was announced.

In the medium term, we anticipate oil prices to be somewhat lower than our pre-war standard, as the UAE's departure from OPEC+ allows for a progressive boost in its output towards the 5mn barrel each day production target when trade normalises. Versus this background, the UAE will accelerate the construction of a brand-new West-East pipeline that must double the capability of export through Fujairah.

The May PMI surveys reported output development reaching its strongest level in three months, driven largely by improved domestic need. They stay below long-run averages, with weak export orders and rate pressures from greater product and transportation expenses are a typical style. In general, we anticipate 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.