Positioning Regional Investments against 2026 Trends

Dangers are slanted to the disadvantage. In the event of an extended conflict, the existing effect on the area will be compoundedthrough raised energy and food costs, decreasing trade, tourism and remittances, increased financial 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 resistant economies with stronger macroeconomic fundamentals, innovate and enhance governance, invest in facilities, and improve employment-creating sectors," said.

With peace and the best action, countries can construct the institutions, abilities and competitive sectors that create opportunities for individuals." With this long-lasting vision in mind, the report takes a close appearance at the region's potential for industrial policy government actions to increase tactical organization activity as a motorist of economic growth and job creation.

ANSR July GCC PRs 50DR+

Federal governments in the area have embraced industrial policy at a high rate in the last decade, often through sovereign wealth funds and state-owned enterprises, but the results have actually been blended. The report highlights the crucial need for strong institutions and cautious targeting of policies. "As nations deal with the heavy toll of the present dispute, it is essential to also not lose sight of the work required for long-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 area prepared straight for the finance profession. The GCC economy deals with a significant contraction this year pending details of the US-Iran arrangement to end the war. We anticipate energy circulations, tourism and financier belief to slowly normalise as war disturbances go away.

ANSR July GCC PRs 50DR+

The interim agreement between the US and Iran is a considerable step towards reaching a full-blown deal. A full return to normality in the Strait of Hormuz will likely take some time, however the threat of a recession-inducing oil price spike has actually decreased. Global GDP is expected to grow by 2.4% this year, 0.2 ppt less than we predicted 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), higher than the decline in the very first year of the Covid pandemic. Kuwait, Iran, Iraq and Qatar stand apart as the hardest hit, owing to their failure to prevent the disturbance to regional shipping, war-driven infrastructure damage and tourist losses.

Our 2026 outlook for the GCC is weaker than 3 months ago, with GDP projection to contract by 2.4% compared to a 0.2% decrease forecasted formerly. We expect Oman and Saudi Arabia to be the least adversely affected by the fallout from the conflict, with both economies continuing to broaden this year.

The economic damage sustained in the last couple of months is substantial. Saudi GDP information for Q1 revealed growth slowed to 3% y/y, with non-oil activities expanding by 2.9%, the weakest pace given that the Covid pandemic. On a seasonally adjusted basis, GDP contracted 1.2% q/q, driven by a 6.8% fall in oil activities as the Strait of Hormuz disturbance hit late in the quarter.

Top Foreign Investment Avenues in the GCC Market

Aside from Oman, all GCC manufacturers in addition to Iran and Iraq have suffered comprehensive oil and gas production losses since the start of the conflict. Might data reveal regional 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 assisted avoid an even larger plunge in output.

ANSR July GCC PRs 50DR+

We anticipate GCC oil sector output to agreement by 14.5% this year, which will mark the steepest decline in several years. We then anticipate a 23.5% rebound next year, driven largely by normalisation from a badly depressed base. Oil prices have been unstable, reducing listed below $85 per barrel as the interim agreement 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+ enables for a gradual boost in its output towards the 5mn barrel per day production target when trade normalises. Against this background, the UAE will accelerate the building and construction of a brand-new West-East pipeline that should double the capacity of export through Fujairah.

The May PMI studies reported output growth reaching its greatest level in three months, driven mostly by enhanced domestic demand. However, they stay listed below long-run averages, with weak export orders and rate pressures from greater material and transportation costs are a common style. Overall, we anticipate a 1.1% contraction in GCC non-energy sectors this year (compared to 4.2% growth pre-war) and a gradual healing over the rest of the decade.