Essential Equity Market Insights for Regional Investors

Threats are slanted to the downside. In the occasion of a prolonged conflict, the existing effect on the region will be compoundedthrough elevated energy and food rates, decreasing trade, tourism and remittances, increased financial pressures, and displacement. "The current crisis is a plain suggestion of the work ahead for the region: not just to weather shocks, but to reconstruct more resistant economies with stronger macroeconomic basics, innovate and enhance governance, invest in facilities, and enhance employment-creating sectors," said.

With peace and the right action, countries can construct the institutions, capabilities and competitive sectors that develop opportunities for people." With this long-term vision in mind, the report takes a close take a look at the area's capacity for industrial policy federal government actions to increase strategic business activity as a driver of economic growth and job production.

ANSR July GCC PRs 50DR+

Federal governments in the area have actually adopted industrial policy at a high rate in the last decade, often through sovereign wealth funds and state-owned enterprises, however the results have been blended. The report highlights the vital requirement for strong organizations and careful targeting of policies. "As countries face the heavy toll of the present dispute, it is essential to also not forget the work needed for long-lasting peace and success," said.

Navigating Investment Strategies in a Global Economy

Q2 2026: The ICAEW Economic Update Middle East, is a quarterly economic projection for the region prepared directly for the finance occupation. The GCC economy deals with a significant contraction this year pending information of the US-Iran arrangement to end the war. We anticipate energy circulations, tourism and financier belief to slowly normalise as war interruptions subside.

ANSR July GCC PRs 50DR+

The interim arrangement in between the United States and Iran is a substantial step towards reaching a full-blown offer. A full return to normality in the Strait of Hormuz will likely take time, however the danger 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 projected three months earlier, 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 stick out as the hardest struck, owing to their inability to prevent the interruption to regional shipping, war-driven infrastructure damage and tourist losses.

Our 2026 outlook for the GCC is weaker than three months earlier, with GDP forecast to agreement by 2.4% compared to a 0.2% decline forecasted formerly. We anticipate 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 economic damage sustained in the last few months is significant. Saudi GDP information for Q1 revealed development slowed to 3% y/y, with non-oil activities broadening by 2.9%, the weakest pace 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 struck late in the quarter.

International Investment Opportunities across the GCC

Aside from Oman, all GCC producers along with Iran and Iraq have actually suffered extensive oil and gas production losses since the start of the conflict. May data reveal local production almost halved 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 helped prevent an even larger 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 numerous decades. We then anticipate a 23.5% rebound next year, driven mostly by normalisation from a significantly depressed base. Meanwhile, oil rates have actually been unstable, relieving below $85 per barrel as the interim contract was revealed.

In the medium term, we expect oil prices to be somewhat lower than our pre-war baseline, as the UAE's departure from OPEC+ enables for a progressive increase in its output towards the 5mn barrel per day production target once trade normalises. Against this background, the UAE will accelerate the building of a brand-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 three months, driven mostly by improved domestic need. They remain listed below long-run averages, with weak export orders and cost pressures from greater material and transportation expenses are a common theme. Overall, we anticipate a 1.1% contraction in GCC non-energy sectors this year (compared to 4.2% development pre-war) and a progressive recovery over the remainder of the years.