International Investment Prospects within the GCC

Risks are tilted to the disadvantage. In the occasion of an extended dispute, the existing influence on the area will be compoundedthrough raised energy and food prices, decreasing trade, tourism and remittances, increased fiscal pressures, and displacement. "The current crisis is a stark pointer of the work ahead for the region: not only to weather shocks, however to rebuild more durable economies with more powerful macroeconomic fundamentals, innovate and enhance governance, purchase facilities, and improve employment-creating sectors," said.

With peace and the ideal action, countries can construct the institutions, capabilities and competitive sectors that develop opportunities for individuals." With this long-lasting vision in mind, the report takes a close take a look at the area's potential for commercial policy federal government actions to increase tactical organization activity as a motorist of economic development and job creation.

ANSR July GCC PRs 50DR+

Federal governments in the region have embraced industrial policy at a high rate in the last years, typically through sovereign wealth funds and state-owned enterprises, but the results have actually been mixed. The report highlights the important requirement for strong institutions and mindful targeting of policies. "As countries face the heavy toll of today conflict, it is very important to also not forget the work needed for long-lasting peace and prosperity," said.

Key Equity Capital Strategies for Regional Investors

Q2 2026: The ICAEW Economic Update Middle East, is a quarterly economic forecast for the area prepared directly for the finance profession. The GCC economy faces a significant contraction this year pending information of the US-Iran agreement to end the war. We anticipate energy flows, tourism and investor belief to slowly normalise as war disruptions decrease.

ANSR July GCC PRs 50DR+

The interim arrangement between the United States and Iran is a substantial action towards reaching a full-blown offer. A complete go back to normality in the Strait of Hormuz will likely require time, but the threat 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 forecasted 3 months back, and 3.1% in 2027.

We forecast a 4.1% contraction in Middle East GDP this year (versus projected 3.6% expansion before the war), greater than the decline in the first year of the Covid pandemic. Kuwait, Iran, Iraq and Qatar stick out as the hardest struck, owing to their failure to prevent the disturbance to local shipping, war-driven infrastructure damage and tourism losses.

Our 2026 outlook for the GCC is weaker than 3 months ago, with GDP projection to agreement by 2.4% compared to a 0.2% decline projected previously. We expect Oman and Saudi Arabia to be the least negatively impacted by the fallout from the conflict, with both economies continuing to expand this year.

The financial damage incurred in the last few months is considerable. Saudi GDP data for Q1 showed growth slowed to 3% y/y, with non-oil activities expanding by 2.9%, the weakest speed 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 interruption hit late in the quarter.

Evaluating GCC Investment Resilience in 2026

Aside from Oman, all GCC manufacturers along with Iran and Iraq have actually suffered extensive oil and gas production losses since the start of the dispute. Might information reveal regional 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 prevent an even larger 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 decrease in numerous decades. We then anticipate a 23.5% rebound next year, driven mainly by normalisation from a severely depressed base. Oil costs have been unpredictable, reducing below $85 per barrel as the interim arrangement was revealed.

In the medium term, we anticipate oil rates 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 per day production target when trade normalises. Versus 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 growth reaching its greatest level in 3 months, driven mainly by improved domestic need. They remain below long-run averages, with weak export orders and cost pressures from higher product and transportation expenses are a typical theme. Overall, we expect a 1.1% contraction in GCC non-energy sectors this year (compared to 4.2% development pre-war) and a progressive healing over the rest of the years.