Top International Investment Prospects for the GCC Market

Risks are slanted to the drawback. In case of an extended dispute, the present influence on the region will be compoundedthrough raised energy and food rates, decreasing trade, tourist and remittances, increased fiscal pressures, and displacement. "The current crisis is a stark pointer of the work ahead for the area: not just to weather shocks, however to restore more durable economies with stronger macroeconomic fundamentals, innovate and improve governance, invest in infrastructure, and boost employment-creating sectors," said.

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

ANSR July GCC PRs 50DR+

Governments in the region have actually adopted industrial policy at a high rate in the last years, typically through sovereign wealth funds and state-owned enterprises, however the results have actually been blended. The report highlights the crucial need for strong organizations and careful targeting of policies. "As countries deal with the heavy toll of today dispute, it is necessary to also not lose sight of the work required for long-lasting peace and success," said.

Navigating Investment Diversification in a Global Economy

Q2 2026: The ICAEW Economic Update Middle East, is a quarterly financial forecast for the area prepared straight for the financing profession. The GCC economy deals with 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 disruptions diminish.

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 threat of a recession-inducing oil cost spike has actually decreased. Global GDP is expected to grow by 2.4% this year, 0.2 ppt less than we predicted 3 months back, and 3.1% in 2027.

We anticipate a 4.1% contraction in Middle East GDP this year (versus predicted 3.6% expansion before the war), greater than the decrease in the first year of the Covid pandemic. Kuwait, Iran, Iraq and Qatar stick out as the hardest hit, owing to their inability to avoid the disruption to regional shipping, war-driven infrastructure damage and tourist 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% decrease 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 broaden this year.

The economic damage sustained in the last few 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 rate because 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 hit late in the quarter.

Why Industrial Diversification Will Shape Arabian Markets

Aside from Oman, all GCC producers as well as Iran and Iraq have suffered extensive oil and gas production losses because the start of the conflict. May information reveal local production nearly halved from pre-war levels, with the decrease 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 assisted prevent an even larger plunge in output.

ANSR July GCC PRs 50DR+

Nevertheless, we anticipate GCC oil sector output to agreement by 14.5% this year, which will mark the steepest decrease in a number of decades. We then expect a 23.5% rebound next year, driven largely by normalisation from a significantly depressed base. On the other hand, oil prices have been volatile, alleviating below $85 per barrel as the interim contract was revealed.

In the medium term, we anticipate oil costs to be somewhat lower than our pre-war baseline, as the UAE's departure from OPEC+ permits a gradual boost in its output towards the 5mn barrel daily production target once trade normalises. Against this background, the UAE will speed up the building and construction of a brand-new West-East pipeline that ought to double the capacity of export through Fujairah.

The May PMI studies reported output development reaching its strongest level in three months, driven mostly by enhanced domestic need. They remain listed below long-run averages, with weak export orders and cost pressures from higher material and transportation expenses are a common theme. Overall, we anticipate a 1.1% contraction in GCC non-energy sectors this year (compared to 4.2% growth pre-war) and a steady recovery over the rest of the decade.