Future Middle Eastern Market Outlook

Dangers are slanted to the disadvantage. In the occasion of an extended dispute, the present effect on the area will be compoundedthrough elevated energy and food costs, decreasing trade, tourism and remittances, increased fiscal pressures, and displacement. "The current crisis is a plain pointer of the work ahead for the region: not only to weather shocks, however to rebuild more resistant economies with more powerful macroeconomic principles, innovate and enhance governance, purchase infrastructure, and boost employment-creating sectors," stated.

With peace and the ideal action, countries can develop the institutions, abilities and competitive sectors that produce chances for individuals." With this long-term vision in mind, the report takes a close appearance at the area's capacity for commercial policy federal government actions to increase strategic company activity as a driver of economic growth and task creation.

ANSR July GCC PRs 50DR+

Federal governments in the region have embraced commercial policy at a high rate in the last years, frequently through sovereign wealth funds and state-owned business, but the results have been blended. The report highlights the critical need for strong institutions and cautious targeting of policies. "As nations face the heavy toll of the present dispute, it is very important to also not lose sight of the work required for long-lasting peace and success," said.

2026 Business Landscape of Arabia

Q2 2026: The ICAEW Economic Update Middle East, is a quarterly economic forecast for the region prepared directly for the finance profession. The GCC economy faces a marked contraction this year pending details of the US-Iran arrangement to end the war. We expect energy flows, tourist and investor belief to gradually normalise as war interruptions diminish.

ANSR July GCC PRs 50DR+

The interim arrangement between the US 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 some time, however the danger of a recession-inducing oil cost spike has decreased. Global GDP is expected to grow by 2.4% this year, 0.2 ppt less than we projected three months ago, and 3.1% in 2027.

We anticipate a 4.1% contraction in Middle East GDP this year (versus predicted 3.6% expansion before the war), higher than the decline in the very first year of the Covid pandemic. Kuwait, Iran, Iraq and Qatar stick out as the hardest hit, owing to their inability to prevent the interruption to regional shipping, war-driven infrastructure damage and tourism losses.

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

Future Business Climate in Arabia

Aside from Oman, all GCC producers as well as Iran and Iraq have actually suffered extensive oil and gas production losses considering that the start of the conflict. Might information reveal local production almost halved 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 assisted avoid an even larger plunge in output.

ANSR July GCC PRs 50DR+

We forecast GCC oil sector output to contract by 14.5% this year, which will mark the steepest decline in several years. We then anticipate a 23.5% rebound next year, driven mostly by normalisation from a significantly depressed base. Oil prices have actually been volatile, alleviating listed below $85 per barrel as the interim arrangement was announced.

In the medium term, we anticipate oil prices to be a little lower than our pre-war standard, as the UAE's departure from OPEC+ permits a progressive increase in its output towards the 5mn barrel per day production target when trade normalises. Against this backdrop, the UAE will accelerate the building and construction of a new West-East pipeline that must double the capability of export through Fujairah.

The May PMI studies reported output growth reaching its strongest level in three months, driven mostly by enhanced domestic need. Nevertheless, they remain below long-run averages, with weak export orders and price pressures from greater product and transport costs are a common style. In general, we expect a 1.1% contraction in GCC non-energy sectors this year (compared to 4.2% growth pre-war) and a progressive recovery over the remainder of the years.