Future Investment Climate of Arabia

Risks are slanted to the downside. In case of an extended dispute, the existing influence on the region will be compoundedthrough raised energy and food rates, declining trade, tourism and remittances, increased fiscal pressures, and displacement. "The current crisis is a stark suggestion of the work ahead for the area: not just to weather shocks, but to reconstruct more durable economies with stronger macroeconomic principles, innovate and improve governance, buy infrastructure, and boost employment-creating sectors," stated.

With peace and the ideal action, nations can build the institutions, abilities and competitive sectors that develop chances for individuals." With this long-lasting vision in mind, the report takes a close take a look at the area's potential for industrial policy federal government actions to increase strategic service activity as a chauffeur of economic development and task development.

ANSR July GCC PRs 50DR+

Governments in the area have embraced commercial policy at a high rate in the last years, often through sovereign wealth funds and state-owned enterprises, but the outcomes have actually been blended. The report highlights the crucial need for strong institutions and mindful targeting of policies. "As countries deal with the heavy toll of the present conflict, it is very important to also not forget the work needed for long-lasting peace and success," said.

Mastering Capital Strategies in a Global Economy

Q2 2026: The ICAEW Economic Update Middle East, is a quarterly economic forecast for the area prepared directly for the financing occupation. The GCC economy faces a significant contraction this year pending information of the US-Iran contract to end the war. We expect energy circulations, tourist and investor belief to slowly normalise as war disturbances decrease.

ANSR July GCC PRs 50DR+

The interim contract in between the United States and Iran is a significant step towards reaching a full-blown deal. A full go back to normality in the Strait of Hormuz will likely take time, however the threat of a recession-inducing oil price spike has declined. International GDP is anticipated to grow by 2.4% this year, 0.2 ppt less than we projected three months back, 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 out as the hardest struck, owing to their failure to prevent the disturbance to local shipping, war-driven facilities damage and tourist losses.

Our 2026 outlook for the GCC is weaker than 3 months earlier, with GDP projection to contract by 2.4% compared to a 0.2% decline projected previously. We anticipate Oman and Saudi Arabia to be the least adversely affected by the fallout from the dispute, with both economies continuing to broaden this year.

The financial damage incurred in the last couple of months is substantial. Saudi GDP data for Q1 showed development slowed to 3% y/y, with non-oil activities expanding by 2.9%, the weakest speed considering that 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.

Future-Proofing Middle East Investments for 2026 Trends

Aside from Oman, all GCC producers as well as Iran and Iraq have suffered substantial oil and gas production losses considering that the start of the conflict. Might information show local production almost 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 prevent an even larger 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 numerous years. We then expect a 23.5% rebound next year, driven largely by normalisation from a badly depressed base. Oil costs have actually been unstable, alleviating below $85 per barrel as the interim arrangement was announced.

In the medium term, we expect oil rates to be slightly lower than our pre-war baseline, as the UAE's departure from OPEC+ enables a progressive increase in its output towards the 5mn barrel per day production target when trade normalises. Versus this background, the UAE will accelerate the building of a new West-East pipeline that must double the capability of export through Fujairah.

The May PMI studies reported output growth reaching its greatest level in three months, driven largely by improved domestic need. However, they stay listed below long-run averages, with weak export orders and cost pressures from higher product and transport expenses are a typical 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 gradual recovery over the rest of the decade.