2026 Investment Landscape of Arabia

Risks are slanted to the disadvantage. In case of a prolonged conflict, the present influence on the area will be compoundedthrough raised energy and food rates, decreasing trade, tourist and remittances, increased fiscal pressures, and displacement. "The current crisis is a stark tip of the work ahead for the area: not only to weather shocks, but to rebuild more resistant economies with stronger macroeconomic basics, innovate and enhance governance, purchase infrastructure, and boost employment-creating sectors," said.

With peace and the ideal action, nations can build the organizations, capabilities and competitive sectors that produce opportunities for individuals." With this long-lasting vision in mind, the report takes a close appearance at the region's potential for commercial policy government actions to increase tactical service activity as a chauffeur of financial growth and task development.

ANSR July GCC PRs 50DR+

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

Positioning Middle East Investments against 2026 Trends

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 marked contraction this year pending details of the US-Iran contract to end the war. We expect energy circulations, tourist and investor belief to gradually normalise as war disruptions diminish.

ANSR July GCC PRs 50DR+

The interim agreement in between the US and Iran is a substantial step towards reaching a full-blown offer. A complete return to normality in the Strait of Hormuz will likely take time, but the threat of a recession-inducing oil rate spike has declined. Global GDP is anticipated to grow by 2.4% this year, 0.2 ppt less than we projected three 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 decline in the very first year of the Covid pandemic. Kuwait, Iran, Iraq and Qatar stand apart as the hardest hit, owing to their failure to prevent the disruption to local shipping, war-driven infrastructure damage and tourist 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% decline projected formerly. We anticipate Oman and Saudi Arabia to be the least negatively impacted by the fallout from the dispute, with both economies continuing to expand this year.

The economic damage incurred in the last few months is significant. Saudi GDP information for Q1 revealed growth slowed to 3% y/y, with non-oil activities broadening by 2.9%, the weakest rate since 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.

Analyzing GCC Investment Resilience for 2026

Aside from Oman, all GCC producers along with Iran and Iraq have actually suffered substantial oil and gas production losses given that the start of the dispute. Might data reveal local production nearly halved 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 assisted prevent an even bigger plunge in output.

ANSR July GCC PRs 50DR+

However, we anticipate GCC oil sector output to contract by 14.5% this year, which will mark the steepest decline in numerous decades. We then expect a 23.5% rebound next year, driven largely by normalisation from a seriously depressed base. On the other hand, oil costs have been unstable, easing listed below $85 per barrel as the interim arrangement was revealed.

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

The May PMI surveys reported output development reaching its strongest level in three months, driven mostly by enhanced domestic need. Nevertheless, they remain below long-run averages, with weak export orders and price pressures from higher material and transportation costs are a typical style. In general, we expect a 1.1% contraction in GCC non-energy sectors this year (compared to 4.2% development pre-war) and a gradual healing over the rest of the decade.