Assessing Regional Market Potential for 2026

Dangers are tilted to the downside. In the occasion of a prolonged dispute, the current effect on the area will be compoundedthrough raised energy and food rates, decreasing trade, tourist and remittances, increased fiscal pressures, and displacement. "The present crisis is a plain suggestion of the work ahead for the region: not only to weather shocks, however to reconstruct more resilient economies with stronger macroeconomic fundamentals, innovate and improve governance, invest in facilities, and enhance employment-creating sectors," stated.

With peace and the best action, countries can develop the institutions, abilities and competitive sectors that develop opportunities for individuals." With this long-term vision in mind, the report takes a close look at the area's potential for industrial policy federal government actions to increase tactical business activity as a chauffeur of financial development and task production.

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, however the results have actually been blended. The report highlights the vital requirement for strong institutions and cautious targeting of policies. "As countries face the heavy toll of the present dispute, it is necessary to also not forget the work needed for lasting peace and prosperity," stated.

Global Capital Opportunities across the Middle East

Q2 2026: The ICAEW Economic Update Middle East, is a quarterly financial projection for the region prepared straight for the finance profession. The GCC economy deals with a significant contraction this year pending information of the US-Iran arrangement to end the war. We expect energy flows, tourist and financier sentiment to gradually normalise as war disruptions decrease.

ANSR July GCC PRs 50DR+

The interim agreement in between the US and Iran is a considerable action towards reaching a full-blown offer. A complete return to normality in the Strait of Hormuz will likely take some time, but the threat of a recession-inducing oil cost spike has actually decreased. Global GDP is anticipated to grow by 2.4% this year, 0.2 ppt less than we projected 3 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), 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 avoid the disturbance to regional shipping, war-driven infrastructure damage and tourist 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 forecasted previously. We anticipate Oman and Saudi Arabia to be the least negatively impacted by the fallout from the dispute, with both economies continuing to expand this year.

The economic damage sustained in the last few months is considerable. Saudi GDP information for Q1 revealed growth slowed to 3% y/y, with non-oil activities broadening by 2.9%, the weakest pace because 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 interruption struck late in the quarter.

Emerging Equity Trading Patterns in 2026

Aside from Oman, all GCC manufacturers as well as Iran and Iraq have suffered substantial oil and gas production losses because the start of the dispute. Might data show regional production almost cut in half 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 avoid an even larger plunge in output.

ANSR July GCC PRs 50DR+

Nevertheless, we forecast GCC oil sector output to agreement by 14.5% this year, which will mark the steepest decrease in numerous decades. We then expect a 23.5% rebound next year, driven largely by normalisation from a seriously depressed base. Meanwhile, oil rates have actually been unstable, alleviating below $85 per barrel as the interim arrangement was announced.

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

The May PMI surveys reported output development reaching its greatest level in three months, driven mainly by improved domestic demand. They stay listed below long-run averages, with weak export orders and rate pressures from higher material and transportation costs are a common style. In general, 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.