Key Stock Capital Insights for Regional Growth

Threats are slanted to the disadvantage. In case of a prolonged conflict, the present influence on the area will be compoundedthrough elevated energy and food prices, decreasing trade, tourism and remittances, increased financial pressures, and displacement. "The current crisis is a plain reminder of the work ahead for the region: not only to weather shocks, however to reconstruct more durable economies with more powerful macroeconomic principles, innovate and improve governance, buy facilities, and boost employment-creating sectors," said.

With peace and the best action, countries can build the institutions, capabilities and competitive sectors that create opportunities for individuals." 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 service activity as a driver of financial development and job creation.

ANSR July GCC PRs 50DR+

Federal governments in the area have embraced commercial policy at a high rate in the last decade, typically through sovereign wealth funds and state-owned business, but the outcomes have actually been mixed. The report highlights the vital requirement for strong organizations and careful targeting of policies. "As nations deal with the heavy toll of the present dispute, it is very important to also not lose sight of the work needed for lasting peace and prosperity," said.

Global Investment Prospects across the GCC

Q2 2026: The ICAEW Economic Update Middle East, is a quarterly economic forecast for the area prepared straight for the financing occupation. The GCC economy faces a marked contraction this year pending details of the US-Iran agreement to end the war. We expect energy flows, tourism and financier sentiment to slowly normalise as war disruptions subside.

ANSR July GCC PRs 50DR+

The interim arrangement between the United States and Iran is a considerable action towards reaching a full-blown deal. A full return to normality in the Strait of Hormuz will likely take time, however the threat of a recession-inducing oil cost spike has decreased. Worldwide GDP is expected to grow by 2.4% this year, 0.2 ppt less than we predicted three months ago, 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), higher than the decrease 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 infrastructure damage and tourism losses.

Our 2026 outlook for the GCC is weaker than three months back, with GDP forecast to contract by 2.4% compared to a 0.2% decrease predicted formerly. We anticipate Oman and Saudi Arabia to be the least negatively 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 substantial. Saudi GDP information for Q1 showed development slowed to 3% y/y, with non-oil activities expanding by 2.9%, the weakest speed 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 disruption struck late in the quarter.

2026 Middle Eastern Economic Projections

Aside from Oman, all GCC producers in addition to Iran and Iraq have suffered substantial oil and gas production losses because the start of the dispute. Might data reveal regional production nearly cut in half from pre-war levels, with the decline 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 assisted avoid 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 decline in several years. We then expect a 23.5% rebound next year, driven mainly by normalisation from a badly depressed base. Meanwhile, oil rates have been unstable, easing listed below $85 per barrel as the interim arrangement was announced.

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

The May PMI surveys reported output development reaching its greatest level in 3 months, driven mainly by enhanced domestic demand. However, they remain listed below long-run averages, with weak export orders and price 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% growth pre-war) and a progressive recovery over the rest of the years.