Key International Investment Avenues in the GCC Market

Dangers are tilted to the drawback. In case of an extended conflict, the current influence on the region will be compoundedthrough elevated energy and food rates, declining trade, tourist and remittances, increased fiscal pressures, and displacement. "The existing crisis is a plain pointer of the work ahead for the area: not just to weather shocks, but to restore more resilient economies with stronger macroeconomic fundamentals, innovate and enhance governance, buy facilities, and improve employment-creating sectors," said.

With peace and the best action, countries can build the organizations, capabilities and competitive sectors that create opportunities for people." With this long-lasting vision in mind, the report takes a close take a look at the area's capacity for industrial policy government actions to increase tactical service activity as a driver of financial development and task production.

ANSR July GCC PRs 50DR+

Governments in the region have embraced industrial policy at a high rate in the last decade, frequently through sovereign wealth funds and state-owned enterprises, but the outcomes have actually been mixed. The report highlights the crucial requirement for strong organizations and mindful targeting of policies. "As countries deal with the heavy toll of today dispute, it is very important to also not forget the work needed for long-lasting peace and prosperity," said.

Key International Investment Prospects in the GCC Market

Q2 2026: The ICAEW Economic Update Middle East, is a quarterly financial forecast for the region prepared straight for the financing occupation. The GCC economy faces a significant contraction this year pending details of the US-Iran agreement to end the war. We expect energy flows, tourist and financier belief to slowly normalise as war disturbances diminish.

ANSR July GCC PRs 50DR+

The interim contract between the US and Iran is a considerable step towards reaching a full-blown offer. A full return to normality in the Strait of Hormuz will likely require time, but the danger of a recession-inducing oil price spike has actually decreased. Worldwide GDP is expected to grow by 2.4% this year, 0.2 ppt less than we projected 3 months ago, 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), higher than the decrease in the very 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 infrastructure damage and tourist losses.

Our 2026 outlook for the GCC is weaker than three months ago, with GDP projection to contract by 2.4% compared to a 0.2% decrease predicted previously. We anticipate Oman and Saudi Arabia to be the least adversely affected by the fallout from the dispute, with both economies continuing to broaden this year.

The economic damage incurred in the last few months is substantial. Saudi GDP data for Q1 revealed growth slowed to 3% y/y, with non-oil activities broadening 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 hit late in the quarter.

How Industrial Shifts Can Shape GCC Markets

Aside from Oman, all GCC producers along with Iran and Iraq have suffered substantial oil and gas production losses because the start of the conflict. May data reveal 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 helped prevent an even bigger plunge in output.

ANSR July GCC PRs 50DR+

We forecast GCC oil sector output to agreement by 14.5% this year, which will mark the steepest decrease in a number of decades. We then anticipate a 23.5% rebound next year, driven mainly by normalisation from a significantly depressed base. Meanwhile, oil prices have actually been volatile, alleviating listed below $85 per barrel as the interim agreement was revealed.

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

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