Upcoming Regional Financial Outlook

Threats are slanted to the disadvantage. In case of a prolonged dispute, the present influence on the area will be compoundedthrough raised energy and food prices, declining trade, tourism and remittances, increased fiscal pressures, and displacement. "The existing crisis is a plain suggestion of the work ahead for the area: not just to weather shocks, but to reconstruct more resistant economies with more powerful macroeconomic fundamentals, innovate and enhance governance, buy facilities, and enhance employment-creating sectors," stated.

With peace and the ideal action, countries can develop the institutions, abilities and competitive sectors that create chances for people." With this long-lasting vision in mind, the report takes a close look at the region's capacity for industrial policy government actions to increase tactical company activity as a driver of financial development and job development.

ANSR July GCC PRs 50DR+

Governments in the region have embraced commercial policy at a high rate in the last years, frequently through sovereign wealth funds and state-owned enterprises, but the outcomes have actually been mixed. The report highlights the important requirement for strong organizations and careful targeting of policies. "As nations deal with the heavy toll of the present conflict, it is necessary to also not forget the work needed for long-lasting peace and success," stated.

Global Investment Opportunities across the GCC

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 information of the US-Iran arrangement to end the war. We expect energy circulations, tourist and financier belief to slowly normalise as war disruptions diminish.

ANSR July GCC PRs 50DR+

The interim arrangement in between the US and Iran is a substantial action towards reaching a full-blown deal. A complete return to normality in the Strait of Hormuz will likely take time, however the danger of a recession-inducing oil rate spike has actually decreased. International GDP is expected to grow by 2.4% this year, 0.2 ppt less than we forecasted three months earlier, and 3.1% in 2027.

We forecast a 4.1% contraction in Middle East GDP this year (versus predicted 3.6% growth before the war), greater than the decrease in the first year of the Covid pandemic. Kuwait, Iran, Iraq and Qatar stand apart as the hardest struck, owing to their failure to prevent the interruption to regional shipping, war-driven facilities damage and tourism 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 expect 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 economic damage sustained 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 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 hit late in the quarter.

How Economic Diversification Will Transform GCC Markets

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 dispute. May data show regional production nearly halved from pre-war levels, with the decrease 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 actually assisted avoid an even larger plunge in output.

ANSR July GCC PRs 50DR+

Nevertheless, we anticipate GCC oil sector output to contract by 14.5% this year, which will mark the steepest decline in numerous decades. We then anticipate a 23.5% rebound next year, driven largely by normalisation from a significantly depressed base. Oil costs have actually been unstable, relieving below $85 per barrel as the interim contract was announced.

In the medium term, we anticipate oil prices to be a little lower than our pre-war baseline, as the UAE's departure from OPEC+ enables a progressive boost in its output towards the 5mn barrel daily production target as soon as trade normalises. Versus this backdrop, the UAE will accelerate the building of a new West-East pipeline that ought to double the capacity of export through Fujairah.

The May PMI studies reported output development reaching its strongest level in 3 months, driven mostly by enhanced domestic demand. Nevertheless, they remain listed below long-run averages, with weak export orders and rate pressures from higher product and transportation costs are a typical theme. In general, we expect a 1.1% contraction in GCC non-energy sectors this year (compared to 4.2% development pre-war) and a progressive recovery over the remainder of the decade.