Securing Middle East Portfolios against 2026 Shifts

Threats are slanted to the drawback. In the occasion of an extended conflict, the existing effects on the region will be compoundedthrough raised energy and food prices, decreasing trade, tourist and remittances, increased fiscal pressures, and displacement. "The existing crisis is a stark tip of the work ahead for the region: not only to weather shocks, but to rebuild more resistant economies with stronger macroeconomic fundamentals, innovate and improve governance, buy facilities, and boost employment-creating sectors," said.

With peace and the right action, countries can build the institutions, capabilities and competitive sectors that produce chances for individuals." With this long-lasting vision in mind, the report takes a close look at the region's capacity for industrial policy federal government actions to increase strategic organization activity as a motorist of financial development and job creation.

ANSR July GCC PRs 50DR+

Federal governments in the region have actually embraced commercial policy at a high rate in the last decade, frequently through sovereign wealth funds and state-owned enterprises, but the outcomes have been blended. The report highlights the critical requirement for strong organizations and mindful targeting of policies. "As countries deal with the heavy toll of today dispute, it is crucial to also not forget the work needed for lasting peace and success," stated.

Upcoming Regional Financial Forecasts

Q2 2026: The ICAEW Economic Update Middle East, is a quarterly financial projection for the region prepared straight for the financing profession. The GCC economy faces a marked contraction this year pending details of the US-Iran contract to end the war. We anticipate energy flows, tourist and financier sentiment to slowly normalise as war disruptions diminish.

ANSR July GCC PRs 50DR+

The interim agreement between the United States and Iran is a considerable step towards reaching a full-blown deal. A full go back to normality in the Strait of Hormuz will likely take some time, but the threat of a recession-inducing oil rate spike has actually decreased. Worldwide GDP is anticipated to grow by 2.4% this year, 0.2 ppt less than we forecasted three months back, and 3.1% in 2027.

We forecast a 4.1% contraction in Middle East GDP this year (versus forecasted 3.6% growth 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 inability to prevent the disruption to local shipping, war-driven infrastructure damage and tourism losses.

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

The financial damage sustained in the last couple of months is considerable. Saudi GDP information for Q1 showed development slowed to 3% y/y, with non-oil activities broadening by 2.9%, the weakest pace 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 hit late in the quarter.

Middle East Stock Trading Trends for 2026

Aside from Oman, all GCC producers in addition to Iran and Iraq have actually suffered extensive oil and gas production losses given that the start of the dispute. May information show regional 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 assisted avoid an even bigger plunge in output.

ANSR July GCC PRs 50DR+

Nonetheless, we anticipate GCC oil sector output to agreement by 14.5% this year, which will mark the steepest decrease in numerous years. We then expect a 23.5% rebound next year, driven largely by normalisation from a badly depressed base. Oil rates have been unstable, easing listed below $85 per barrel as the interim contract was announced.

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

The May PMI studies reported output growth reaching its greatest level in three months, driven mostly by improved domestic need. Nevertheless, they stay listed below long-run averages, with weak export orders and rate pressures from higher material and transport costs are a typical style. Overall, we anticipate a 1.1% contraction in GCC non-energy sectors this year (compared to 4.2% development pre-war) and a gradual healing over the remainder of the years.