International Capital Prospects across the GCC

Risks are tilted to the downside. In case of a prolonged dispute, the existing effect on the area will be compoundedthrough elevated energy and food rates, declining trade, tourist and remittances, increased financial pressures, and displacement. "The present crisis is a plain tip of the work ahead for the region: not only to weather shocks, but to reconstruct more resistant economies with stronger macroeconomic principles, innovate and improve governance, buy facilities, and increase employment-creating sectors," stated.

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

ANSR July GCC PRs 50DR+

Federal governments in the area have actually embraced commercial 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 vital need for strong institutions and careful targeting of policies. "As countries deal with the heavy toll of the present conflict, it is essential to likewise not lose sight of the work required for lasting peace and prosperity," said.

Mastering Capital Strategies for a 2026 Economy

Q2 2026: The ICAEW Economic Update Middle East, is a quarterly financial forecast for the region prepared directly for the finance profession. The GCC economy faces a significant contraction this year pending information of the US-Iran contract to end the war. We expect energy flows, tourism and investor sentiment to gradually normalise as war disturbances decrease.

ANSR July GCC PRs 50DR+

The interim arrangement in between the United States and Iran is a substantial action towards reaching a full-blown offer. A complete return to normality in the Strait of Hormuz will likely take time, however the risk of a recession-inducing oil price spike has declined. Global GDP is anticipated to grow by 2.4% this year, 0.2 ppt less than we forecasted 3 months back, and 3.1% in 2027.

We forecast a 4.1% contraction in Middle East GDP this year (versus projected 3.6% growth 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 struck, owing to their inability to avoid the interruption to regional shipping, war-driven facilities 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% decline predicted previously. We expect Oman and Saudi Arabia to be the least adversely impacted by the fallout from the dispute, with both economies continuing to broaden this year.

The financial damage sustained in the last few months is substantial. Saudi GDP data for Q1 revealed development slowed to 3% y/y, with non-oil activities broadening by 2.9%, the weakest rate considering that 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 disturbance struck late in the quarter.

Global Investment Prospects across the Middle East

Aside from Oman, all GCC manufacturers along with Iran and Iraq have actually suffered comprehensive oil and gas production losses given that the start of the conflict. May data reveal regional 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 assisted prevent an even bigger plunge in output.

ANSR July GCC PRs 50DR+

We anticipate GCC oil sector output to contract by 14.5% this year, which will mark the steepest decrease in several years. We then anticipate a 23.5% rebound next year, driven largely by normalisation from a significantly depressed base. Oil rates have been unpredictable, easing listed below $85 per barrel as the interim arrangement was revealed.

In the medium term, we expect oil costs to be a little lower than our pre-war baseline, as the UAE's departure from OPEC+ enables a steady increase in its output towards the 5mn barrel daily production target as soon as 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 growth reaching its greatest level in 3 months, driven mainly by enhanced domestic need. They stay listed below long-run averages, with weak export orders and cost pressures from greater material and transport expenses are a typical style. Overall, we expect a 1.1% contraction in GCC non-energy sectors this year (compared to 4.2% development pre-war) and a steady recovery over the remainder of the decade.