The 2026 Business Landscape of the GCC

Threats are tilted to the disadvantage. In case of an extended dispute, the present impacts on the area will be compoundedthrough elevated energy and food prices, decreasing trade, tourist and remittances, increased financial pressures, and displacement. "The present crisis is a plain pointer of the work ahead for the region: not just to weather shocks, however to reconstruct more resilient economies with more powerful macroeconomic basics, innovate and improve governance, buy facilities, and enhance employment-creating sectors," said.

With peace and the right action, nations can build the organizations, capabilities and competitive sectors that create opportunities for individuals." With this long-lasting vision in mind, the report takes a close take a look at the area's potential for commercial policy government actions to increase tactical company activity as a chauffeur of financial growth and job production.

ANSR July GCC PRs 50DR+

Federal governments in the area have actually embraced industrial policy at a high rate in the last years, often through sovereign wealth funds and state-owned enterprises, however the results have actually been mixed. The report highlights the crucial need for strong institutions and careful targeting of policies. "As countries deal with the heavy toll of the present dispute, it is essential to likewise not lose sight of the work needed for long-lasting peace and prosperity," stated.

Top International Investment Prospects for the GCC Market

Q2 2026: The ICAEW Economic Update Middle East, is a quarterly economic forecast for the area prepared directly for the finance occupation. The GCC economy deals with a marked contraction this year pending details of the US-Iran agreement to end the war. We expect energy circulations, tourist and financier belief to slowly normalise as war disturbances diminish.

ANSR July GCC PRs 50DR+

The interim agreement in between the United States and Iran is a substantial step towards reaching a full-blown offer. A complete return to normality in the Strait of Hormuz will likely require time, but the threat of a recession-inducing oil cost spike has decreased. Global GDP is expected to grow by 2.4% this year, 0.2 ppt less than we predicted three months back, and 3.1% in 2027.

We anticipate a 4.1% contraction in Middle East GDP this year (versus forecasted 3.6% growth before the war), greater than the decline in the first year of the Covid pandemic. Kuwait, Iran, Iraq and Qatar stand out as the hardest struck, owing to their failure to prevent the interruption to regional shipping, war-driven infrastructure damage and tourist losses.

Our 2026 outlook for the GCC is weaker than 3 months earlier, with GDP forecast to agreement by 2.4% compared to a 0.2% decrease projected formerly. We anticipate Oman and Saudi Arabia to be the least negatively impacted by the fallout from the dispute, with both economies continuing to broaden this year.

The economic damage sustained in the last couple of months is considerable. Saudi GDP data for Q1 showed development slowed to 3% y/y, with non-oil activities expanding by 2.9%, the weakest pace 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.

2026 GCC Market Forecasts

Aside from Oman, all GCC manufacturers along with Iran and Iraq have actually suffered extensive oil and gas production losses given that the start of the conflict. Might data 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 bigger plunge in output.

ANSR July GCC PRs 50DR+

Nonetheless, we forecast GCC oil sector output to contract by 14.5% this year, which will mark the steepest decline in a number of years. We then anticipate a 23.5% rebound next year, driven mainly by normalisation from a badly depressed base. Oil prices have actually been unpredictable, relieving below $85 per barrel as the interim arrangement was announced.

In the medium term, we anticipate oil rates to be somewhat lower than our pre-war baseline, as the UAE's departure from OPEC+ permits a steady boost in its output towards the 5mn barrel each day production target once trade normalises. Against this background, the UAE will accelerate the construction of a brand-new West-East pipeline that must double the capability of export through Fujairah.

The May PMI surveys reported output growth reaching its strongest level in three months, driven largely by improved domestic need. However, they stay listed below long-run averages, with weak export orders and rate pressures from higher material and transportation expenses are a typical theme. Overall, we expect a 1.1% contraction in GCC non-energy sectors this year (compared to 4.2% growth pre-war) and a gradual recovery over the remainder of the decade.