Assessing GCC Investment Resilience in 2026

Threats are tilted to the downside. In the occasion of an extended conflict, the existing effect on the region will be compoundedthrough raised energy and food costs, declining trade, tourism and remittances, increased fiscal pressures, and displacement. "The current crisis is a stark pointer of the work ahead for the area: not just to weather shocks, but to rebuild more resilient economies with more powerful macroeconomic fundamentals, innovate and enhance governance, invest in infrastructure, and enhance employment-creating sectors," stated.

With peace and the best action, nations can construct the organizations, capabilities and competitive sectors that create opportunities for individuals." With this long-lasting vision in mind, the report takes a close take a look at the region's potential for commercial policy government actions to increase tactical service activity as a driver of financial growth and job production.

ANSR July GCC PRs 50DR+

Federal 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, however the results have been mixed. The report highlights the important need for strong institutions and cautious targeting of policies. "As nations face the heavy toll of the present dispute, it is crucial to likewise not forget the work needed for lasting peace and prosperity," said.

Global Investment Opportunities within the GCC

Q2 2026: The ICAEW Economic Update Middle East, is a quarterly financial projection for the region prepared straight for the finance profession. The GCC economy faces a significant contraction this year pending details of the US-Iran agreement to end the war. We anticipate energy flows, tourism and financier sentiment to gradually normalise as war disruptions subside.

ANSR July GCC PRs 50DR+

The interim arrangement between the US and Iran is a considerable step towards reaching a full-blown deal. A complete return to normality in the Strait of Hormuz will likely take some time, but the threat of a recession-inducing oil rate spike has actually declined. Global GDP is anticipated to grow by 2.4% this year, 0.2 ppt less than we forecasted 3 months ago, and 3.1% in 2027.

We forecast a 4.1% contraction in Middle East GDP this year (versus predicted 3.6% growth before the war), greater than the decrease in the very first year of the Covid pandemic. Kuwait, Iran, Iraq and Qatar stand apart as the hardest struck, 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 three months back, with GDP forecast to agreement by 2.4% compared to a 0.2% decline predicted formerly. We expect Oman and Saudi Arabia to be the least adversely affected by the fallout from the conflict, 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 pace since 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 struck late in the quarter.

Top Foreign Capital Avenues in the GCC Region

Aside from Oman, all GCC producers as well as Iran and Iraq have suffered substantial oil and gas production losses given that the start of the conflict. May data show local production almost halved from pre-war levels, with the decrease 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+

However, we anticipate GCC oil sector output to agreement by 14.5% this year, which will mark the steepest decrease in numerous decades. We then expect a 23.5% rebound next year, driven mainly by normalisation from a seriously depressed base. Oil costs have been unpredictable, 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 standard, as the UAE's departure from OPEC+ permits a progressive increase in its output towards the 5mn barrel daily production target when trade normalises. Versus this backdrop, the UAE will speed up the building of a brand-new West-East pipeline that ought to double the capability 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 remain listed below long-run averages, with weak export orders and cost pressures from higher material and transport expenses are a common theme. In general, 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 rest of the years.