Evaluating GCC Investment Resilience in 2026

Threats are slanted to the downside. In the event of an extended conflict, the present effect on the region will be compoundedthrough elevated energy and food prices, decreasing trade, tourist and remittances, increased fiscal pressures, and displacement. "The current crisis is a plain tip of the work ahead for the region: not just to weather shocks, however to reconstruct more resistant economies with more powerful macroeconomic basics, innovate and enhance governance, invest in facilities, and increase employment-creating sectors," stated.

With peace and the ideal action, nations can construct the institutions, capabilities and competitive sectors that develop chances for individuals." With this long-term vision in mind, the report takes a close look at the region's potential for commercial policy government actions to increase tactical company activity as a chauffeur of financial growth and task creation.

ANSR July GCC PRs 50DR+

Federal governments in the region have adopted industrial policy at a high rate in the last years, often through sovereign wealth funds and state-owned business, however the outcomes have actually been blended. The report highlights the critical need for strong organizations and careful targeting of policies. "As nations deal with the heavy toll of today dispute, it is essential to also not forget the work needed for long-lasting peace and prosperity," said.

Evaluating GCC Investment Potential in 2026

Q2 2026: The ICAEW Economic Update Middle East, is a quarterly economic projection for the area prepared straight for the finance profession. The GCC economy faces a significant contraction this year pending information of the US-Iran arrangement to end the war. We expect energy flows, tourism and investor sentiment to slowly normalise as war disruptions subside.

ANSR July GCC PRs 50DR+

The interim agreement between the United States and Iran is a substantial action towards reaching a full-blown deal. A full go back to normality in the Strait of Hormuz will likely take time, but the risk of a recession-inducing oil cost spike has declined. International GDP is expected to grow by 2.4% this year, 0.2 ppt less than we predicted 3 months earlier, and 3.1% in 2027.

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

Our 2026 outlook for the GCC is weaker than three months back, with GDP forecast to agreement by 2.4% compared to a 0.2% decline projected previously. We anticipate Oman and Saudi Arabia to be the least negatively impacted by the fallout from the conflict, with both economies continuing to expand this year.

The financial damage sustained in the last couple of months is considerable. Saudi GDP information for Q1 revealed development slowed to 3% y/y, with non-oil activities expanding by 2.9%, the weakest pace since 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 interruption struck late in the quarter.

Strategic Economic Shifts for the Future

Aside from Oman, all GCC producers along with Iran and Iraq have suffered extensive oil and gas production losses because the start of the dispute. Might information show local production almost cut in half from pre-war levels, with the decline deepening relative to March and April. Rerouting efforts, consisting of 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+

We anticipate GCC oil sector output to agreement by 14.5% this year, which will mark the steepest decrease in a number of years. We then expect a 23.5% rebound next year, driven mainly by normalisation from a badly depressed base. Meanwhile, oil prices have been unstable, reducing 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 a progressive increase in its output towards the 5mn barrel each day production target once trade normalises. Against this backdrop, the UAE will accelerate the building and construction of a brand-new West-East pipeline that must double the capacity of export through Fujairah.

The May PMI studies reported output growth reaching its strongest level in 3 months, driven mainly by enhanced domestic demand. However, they stay below long-run averages, with weak export orders and rate pressures from higher material and transportation costs are a typical style. In general, we expect a 1.1% contraction in GCC non-energy sectors this year (compared to 4.2% development pre-war) and a gradual healing over the remainder of the decade.