Middle East Stock Market Trends in 2026

Risks are slanted to the downside. In case of a prolonged dispute, the present impacts on the area will be compoundedthrough elevated energy and food prices, declining trade, tourist and remittances, increased fiscal pressures, and displacement. "The existing crisis is a plain reminder of the work ahead for the area: not just to weather shocks, but to reconstruct more resilient economies with more powerful macroeconomic basics, innovate and enhance governance, buy infrastructure, and improve employment-creating sectors," said.

With peace and the ideal action, countries can develop the institutions, capabilities and competitive sectors that produce chances for individuals." With this long-lasting vision in mind, the report takes a close appearance at the area's capacity for industrial policy government actions to increase strategic service activity as a motorist of financial growth and task creation.

ANSR July GCC PRs 50DR+

Federal governments in the region have actually embraced commercial policy at a high rate in the last years, typically through sovereign wealth funds and state-owned business, however the results have actually been blended. The report highlights the vital need for strong organizations and cautious targeting of policies. "As nations face the heavy toll of today conflict, it is essential to also not forget the work needed for long-lasting peace and prosperity," said.

Top International Investment Avenues for the GCC Region

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

ANSR July GCC PRs 50DR+

The interim agreement between the United States and Iran is a significant action towards reaching a full-blown deal. A full return to normality in the Strait of Hormuz will likely take some time, but the danger of a recession-inducing oil rate spike has declined. International GDP is anticipated to grow by 2.4% this year, 0.2 ppt less than we forecasted 3 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), higher than the decline in the first year of the Covid pandemic. Kuwait, Iran, Iraq and Qatar stand apart as the hardest struck, owing to their inability to avoid the interruption to regional shipping, war-driven infrastructure damage and tourism losses.

Our 2026 outlook for the GCC is weaker than 3 months ago, with GDP projection to agreement by 2.4% compared to a 0.2% decrease predicted 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 financial damage sustained in the last few months is considerable. Saudi GDP information for Q1 showed development slowed to 3% y/y, with non-oil activities broadening by 2.9%, the weakest speed given 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 disturbance struck late in the quarter.

Key International Capital Avenues in the GCC Market

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. May data reveal local production almost 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 actually helped 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 decrease in numerous years. We then anticipate a 23.5% rebound next year, driven mainly by normalisation from a seriously depressed base. On the other hand, oil rates have actually been volatile, easing listed below $85 per barrel as the interim contract was announced.

In the medium term, we anticipate 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 when trade normalises. Versus this background, the UAE will accelerate the building of a brand-new West-East pipeline that must double the capability of export through Fujairah.

The May PMI surveys reported output development reaching its greatest level in 3 months, driven largely by enhanced domestic demand. However, they remain listed below long-run averages, with weak export orders and cost pressures from greater product and transportation costs are a common theme. Overall, we anticipate 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 years.