Evaluating GCC Investment Potential for 2026

Risks are tilted to the disadvantage. In case of an extended conflict, the present effects on the area will be compoundedthrough raised energy and food costs, decreasing trade, tourism and remittances, increased financial pressures, and displacement. "The present crisis is a stark pointer of the work ahead for the region: not just to weather shocks, however to restore more resistant economies with more powerful macroeconomic principles, innovate and improve governance, invest in infrastructure, and increase employment-creating sectors," said.

With peace and the best action, nations can construct the institutions, capabilities and competitive sectors that create chances for people." With this long-lasting vision in mind, the report takes a close take a look at the region's potential for commercial policy federal government actions to increase tactical company activity as a driver of economic development 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, but the outcomes have been blended. The report highlights the important requirement for strong organizations and cautious targeting of policies. "As nations face the heavy toll of the present conflict, it is important to likewise not lose sight of the work needed for lasting peace and prosperity," said.

Securing Regional Investments for 2026 Trends

Q2 2026: The ICAEW Economic Update Middle East, is a quarterly financial projection for the region prepared straight for the finance occupation. The GCC economy faces a marked contraction this year pending details of the US-Iran contract to end the war. We expect energy flows, tourist and investor belief to gradually normalise as war disturbances go away.

ANSR July GCC PRs 50DR+

The interim agreement between the United States 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 danger of a recession-inducing oil rate spike has actually declined. Worldwide GDP is anticipated to grow by 2.4% this year, 0.2 ppt less than we projected three 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), greater than the decrease 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 infrastructure damage and tourist losses.

Our 2026 outlook for the GCC is weaker than three months back, with GDP forecast to agreement by 2.4% compared to a 0.2% decline predicted previously. We anticipate Oman and Saudi Arabia to be the least adversely impacted by the fallout from the dispute, with both economies continuing to expand this year.

The financial damage sustained in the last couple of months is considerable. Saudi GDP data for Q1 showed development slowed to 3% y/y, with non-oil activities broadening by 2.9%, the weakest pace 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 disruption struck late in the quarter.

Emerging Stock Market Trends for 2026

Aside from Oman, all GCC producers along with Iran and Iraq have actually suffered extensive oil and gas production losses given that the start of the conflict. May data show local production nearly halved from pre-war levels, with the decline 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+

We forecast GCC oil sector output to contract by 14.5% this year, which will mark the steepest decline in a number of years. We then expect a 23.5% rebound next year, driven largely by normalisation from a badly depressed base. On the other hand, oil costs have been unstable, reducing listed below $85 per barrel as the interim contract was revealed.

In the medium term, we anticipate oil costs to be somewhat lower than our pre-war standard, as the UAE's departure from OPEC+ permits for a progressive increase in its output towards the 5mn barrel daily production target when trade normalises. Versus this backdrop, the UAE will speed up the building of a brand-new West-East pipeline that ought to double the capability of export through Fujairah.

The May PMI surveys reported output growth reaching its strongest level in 3 months, driven mostly by improved domestic need. They stay below long-run averages, with weak export orders and price pressures from higher 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% development pre-war) and a steady recovery over the remainder of the years.