Securing Regional Investments against 2026 Trends

Dangers are tilted to the downside. In case of a prolonged conflict, the current effect on the region will be compoundedthrough raised energy and food rates, declining trade, tourist and remittances, increased fiscal pressures, and displacement. "The present crisis is a stark reminder of the work ahead for the region: not just to weather shocks, but to reconstruct more resilient economies with more powerful macroeconomic basics, innovate and enhance governance, buy facilities, and increase employment-creating sectors," stated.

With peace and the best action, countries can develop the institutions, abilities and competitive sectors that develop opportunities for people." With this long-term vision in mind, the report takes a close appearance at the area's potential for commercial policy federal government actions to increase tactical business activity as a driver of financial growth and task development.

ANSR July GCC PRs 50DR+

Governments in the region have actually embraced industrial policy at a high rate in the last decade, typically through sovereign wealth funds and state-owned enterprises, but the outcomes have actually been mixed. The report highlights the important need for strong institutions and careful targeting of policies. "As countries deal with the heavy toll of today dispute, it is very important to likewise not lose sight of the work needed for long-lasting peace and prosperity," said.

Why Industrial Shifts Will Transform GCC Markets

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

ANSR July GCC PRs 50DR+

The interim contract between the US and Iran is a substantial step towards reaching a full-blown deal. A complete go back to normality in the Strait of Hormuz will likely require time, however the threat 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 predicted three months earlier, 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), higher than the decrease in the very first year of the Covid pandemic. Kuwait, Iran, Iraq and Qatar stick out as the hardest hit, owing to their inability to prevent the disruption to local shipping, war-driven facilities damage and tourism losses.

Our 2026 outlook for the GCC is weaker than 3 months ago, with GDP projection to contract by 2.4% compared to a 0.2% decrease projected previously. 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 few months is substantial. Saudi GDP information for Q1 showed growth slowed to 3% y/y, with non-oil activities expanding 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 disruption hit late in the quarter.

Evaluating GCC Market Resilience for 2026

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 conflict. May information reveal 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 helped avoid an even bigger plunge in output.

ANSR July GCC PRs 50DR+

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 mainly by normalisation from a significantly depressed base. Meanwhile, oil costs have actually been unstable, reducing listed below $85 per barrel as the interim agreement was revealed.

In the medium term, we anticipate oil costs to be slightly lower than our pre-war standard, as the UAE's departure from OPEC+ enables a gradual boost in its output towards the 5mn barrel per day production target once trade normalises. Versus this backdrop, the UAE will accelerate the construction of a brand-new West-East pipeline that must double the capacity of export through Fujairah.

The May PMI studies reported output growth reaching its greatest level in three months, driven mostly by improved domestic demand. Nevertheless, they stay listed below long-run averages, with weak export orders and price pressures from higher material and transportation expenses are a common style. Overall, we expect 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.