GCC Stock Market Patterns for 2026

Risks are tilted to the drawback. In case of a prolonged conflict, the present influence on the area will be compoundedthrough elevated energy and food prices, declining trade, tourist and remittances, increased financial pressures, and displacement. "The present crisis is a stark pointer of the work ahead for the region: not only to weather shocks, but to rebuild more resilient economies with more powerful macroeconomic principles, innovate and improve governance, invest in infrastructure, and boost employment-creating sectors," said.

With peace and the right action, countries can construct the institutions, capabilities and competitive sectors that produce opportunities for people." With this long-lasting vision in mind, the report takes a close appearance at the area's capacity for industrial policy federal government actions to increase tactical organization activity as a chauffeur of financial growth and job production.

ANSR July GCC PRs 50DR+

Governments in the region have embraced commercial policy at a high rate in the last decade, frequently through sovereign wealth funds and state-owned business, but the outcomes have actually been mixed. The report highlights the crucial need for strong institutions and cautious targeting of policies. "As nations face the heavy toll of today conflict, it is essential to also not forget the work required for long-lasting peace and prosperity," said.

How Economic Diversification Can Shape Arabian Markets

Q2 2026: The ICAEW Economic Update Middle East, is a quarterly financial projection for the region prepared directly for the financing profession. The GCC economy faces a marked contraction this year pending information of the US-Iran contract to end the war. We expect energy circulations, tourism and investor sentiment to gradually normalise as war disturbances subside.

ANSR July GCC PRs 50DR+

The interim contract in between the United States and Iran is a significant step towards reaching a full-blown offer. A complete return to normality in the Strait of Hormuz will likely require time, but the danger of a recession-inducing oil price spike has decreased. Worldwide 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 anticipate a 4.1% contraction in Middle East GDP this year (versus projected 3.6% growth before the war), higher than the decrease in the 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 tourist losses.

Our 2026 outlook for the GCC is weaker than three months earlier, with GDP forecast to agreement by 2.4% compared to a 0.2% decrease predicted 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 sustained in the last couple of months is considerable. Saudi GDP data for Q1 revealed development slowed to 3% y/y, with non-oil activities expanding by 2.9%, the weakest pace because 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 hit late in the quarter.

Strategic Industrial Expansion in the Future

Aside from Oman, all GCC producers along with Iran and Iraq have suffered substantial oil and gas production losses given that the start of the dispute. May information show local 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 assisted 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 decline in a number of decades. We then anticipate a 23.5% rebound next year, driven largely by normalisation from a severely depressed base. Meanwhile, oil prices have actually been unpredictable, easing below $85 per barrel as the interim contract was revealed.

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

The May PMI studies reported output development reaching its greatest level in three months, driven largely by improved domestic need. They remain listed below long-run averages, with weak export orders and price pressures from higher product and transport expenses are a typical theme. Overall, we anticipate a 1.1% contraction in GCC non-energy sectors this year (compared to 4.2% development pre-war) and a gradual recovery over the remainder of the years.