Future-Proofing Middle East Investments for 2026 Shifts

Risks are tilted to the disadvantage. In case of an extended conflict, the existing effects on the region will be compoundedthrough raised energy and food costs, decreasing trade, tourist and remittances, increased financial pressures, and displacement. "The existing crisis is a stark pointer of the work ahead for the area: not only to weather shocks, however to restore more resilient economies with stronger macroeconomic basics, innovate and improve governance, buy facilities, and increase employment-creating sectors," stated.

With peace and the ideal action, nations can construct the organizations, capabilities and competitive sectors that produce opportunities for people." With this long-lasting vision in mind, the report takes a close take a look at the area's potential for commercial policy federal government actions to increase tactical business activity as a motorist of economic development and task creation.

ANSR July GCC PRs 50DR+

Governments in the region have actually adopted commercial policy at a high rate in the last years, typically through sovereign wealth funds and state-owned business, but the outcomes have actually been mixed. The report highlights the critical requirement for strong institutions and careful targeting of policies. "As nations deal with the heavy toll of today conflict, it is essential to likewise not lose sight of the work needed for lasting peace and prosperity," said.

Key Equity Capital Strategies for Regional Growth

Q2 2026: The ICAEW Economic Update Middle East, is a quarterly financial projection for the area prepared directly for the finance occupation. The GCC economy faces a significant contraction this year pending details of the US-Iran agreement to end the war. We expect energy circulations, tourist and investor sentiment to gradually normalise as war interruptions diminish.

ANSR July GCC PRs 50DR+

The interim agreement between the US and Iran is a substantial step towards reaching a full-blown deal. A full go back to normality in the Strait of Hormuz will likely take some time, but the risk of a recession-inducing oil rate spike has actually decreased. Global GDP is anticipated to grow by 2.4% this year, 0.2 ppt less than we predicted three months ago, 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 decline in the first year of the Covid pandemic. Kuwait, Iran, Iraq and Qatar stand out as the hardest hit, owing to their failure to avoid the disturbance to regional shipping, war-driven facilities damage and tourism losses.

Our 2026 outlook for the GCC is weaker than 3 months ago, with GDP forecast to agreement by 2.4% compared to a 0.2% decline projected formerly. We anticipate 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 significant. Saudi GDP data for Q1 showed development slowed to 3% y/y, with non-oil activities expanding by 2.9%, the weakest rate 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 struck late in the quarter.

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Aside from Oman, all GCC producers along with Iran and Iraq have suffered substantial oil and gas production losses since the start of the dispute. Might information reveal regional 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 helped avoid an even bigger 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 several years. We then anticipate a 23.5% rebound next year, driven mainly by normalisation from a badly depressed base. Oil rates have been unpredictable, reducing below $85 per barrel as the interim agreement was revealed.

In the medium term, we expect oil prices to be a little lower than our pre-war standard, as the UAE's departure from OPEC+ enables a gradual boost in its output towards the 5mn barrel each day production target once trade normalises. Versus this background, the UAE will accelerate the building and construction of a brand-new West-East pipeline that must double the capability of export through Fujairah.

The May PMI studies reported output development reaching its strongest level in three months, driven mostly by enhanced domestic need. However, they remain below long-run averages, with weak export orders and price pressures from greater product and transport expenses are a common style. Overall, we expect a 1.1% contraction in GCC non-energy sectors this year (compared to 4.2% development pre-war) and a progressive healing over the rest of the years.