Global Investment Opportunities across the Middle East

Threats are tilted to the disadvantage. In the event of an extended dispute, the current influence on the area will be compoundedthrough elevated energy and food costs, declining trade, tourist and remittances, increased fiscal pressures, and displacement. "The existing crisis is a plain pointer of the work ahead for the region: not just to weather shocks, but to restore more durable economies with stronger macroeconomic fundamentals, innovate and improve governance, buy infrastructure, and enhance employment-creating sectors," stated.

With peace and the right action, countries can construct the institutions, abilities and competitive sectors that create chances for people." With this long-term vision in mind, the report takes a close take a look at the area's capacity for commercial policy federal government actions to increase strategic organization activity as a motorist of economic development and job development.

ANSR July GCC PRs 50DR+

Governments in the area have embraced industrial policy at a high rate in the last years, often through sovereign wealth funds and state-owned business, but the results have actually been blended. The report highlights the critical need for strong institutions and cautious targeting of policies. "As nations deal with the heavy toll of today dispute, it is necessary to also not lose sight of the work needed for long-lasting peace and prosperity," said.

Foreign Investment Prospects within the GCC

Q2 2026: The ICAEW Economic Update Middle East, is a quarterly economic forecast for the region prepared straight for the financing profession. The GCC economy faces a marked contraction this year pending information of the US-Iran arrangement to end the war. We anticipate energy circulations, tourist and investor sentiment to slowly normalise as war disturbances go away.

ANSR July GCC PRs 50DR+

The interim agreement between the US and Iran is a considerable step towards reaching a full-blown offer. A full go back to normality in the Strait of Hormuz will likely require time, but the risk of a recession-inducing oil price spike has actually declined. International GDP is expected to grow by 2.4% this year, 0.2 ppt less than we projected three months earlier, and 3.1% in 2027.

We forecast a 4.1% contraction in Middle East GDP this year (versus forecasted 3.6% expansion before the war), greater than the decrease in the 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 facilities damage and tourist losses.

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

The economic damage incurred in the last few 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 rate considering 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 interruption hit late in the quarter.

Assessing GCC Investment Potential in 2026

Aside from Oman, all GCC producers in addition to Iran and Iraq have suffered comprehensive oil and gas production losses given that the start of the conflict. Might data reveal local production nearly 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 prevent an even larger plunge in output.

ANSR July GCC PRs 50DR+

Nevertheless, we anticipate GCC oil sector output to contract by 14.5% this year, which will mark the steepest decrease in several decades. We then expect a 23.5% rebound next year, driven mostly by normalisation from a seriously depressed base. On the other hand, oil costs have actually been unpredictable, easing below $85 per barrel as the interim contract was revealed.

In the medium term, we expect oil costs to be a little lower than our pre-war standard, as the UAE's departure from OPEC+ permits a progressive increase in its output towards the 5mn barrel daily production target once trade normalises. Versus this background, the UAE will speed up the building of a new West-East pipeline that should double the capacity of export through Fujairah.

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