The 2026 Investment Landscape in Arabia

Threats are slanted to the drawback. In the occasion of a prolonged dispute, the current impacts on the region will be compoundedthrough elevated energy and food prices, decreasing trade, tourism and remittances, increased financial pressures, and displacement. "The current crisis is a stark pointer of the work ahead for the area: not only to weather shocks, but to restore more resilient economies with more powerful macroeconomic basics, innovate and enhance governance, buy infrastructure, and enhance employment-creating sectors," said.

With peace and the right action, nations can build the organizations, abilities and competitive sectors that develop chances for people." With this long-lasting vision in mind, the report takes a close look at the area's potential for industrial policy federal government actions to increase tactical service activity as a motorist of financial growth and task creation.

ANSR July GCC PRs 50DR+

Governments in the area have actually embraced industrial policy at a high rate in the last years, frequently through sovereign wealth funds and state-owned business, however the outcomes have been mixed. The report highlights the crucial requirement for strong institutions and careful targeting of policies. "As nations deal with the heavy toll of today conflict, it is essential to also not forget the work needed for long-lasting peace and success," stated.

Foreign Investment Prospects across the Middle East

Q2 2026: The ICAEW Economic Update Middle East, is a quarterly economic forecast for the region prepared straight for the financing profession. The GCC economy faces a marked contraction this year pending details of the US-Iran agreement to end the war. We expect energy circulations, tourist and investor sentiment to slowly normalise as war disturbances decrease.

ANSR July GCC PRs 50DR+

The interim agreement between the US and Iran is a significant step towards reaching a full-blown deal. A complete go back to normality in the Strait of Hormuz will likely take time, however the threat of a recession-inducing oil rate spike has actually declined. Worldwide GDP is expected to grow by 2.4% this year, 0.2 ppt less than we predicted 3 months ago, 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 decline in the first year of the Covid pandemic. Kuwait, Iran, Iraq and Qatar stick out as the hardest hit, owing to their inability to avoid the disruption to regional shipping, war-driven infrastructure 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 impacted by the fallout from the conflict, with both economies continuing to expand this year.

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

Key Stock Capital Insights for GCC Growth

Aside from Oman, all GCC manufacturers along with Iran and Iraq have actually suffered substantial oil and gas production losses given that the start of the conflict. May information reveal regional 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 helped prevent an even larger plunge in output.

ANSR July GCC PRs 50DR+

Nevertheless, we forecast GCC oil sector output to contract by 14.5% this year, which will mark the steepest decrease in several decades. We then expect a 23.5% rebound next year, driven mostly by normalisation from a badly depressed base. Oil prices have actually been unstable, relieving listed below $85 per barrel as the interim contract was announced.

In the medium term, we anticipate oil rates to be somewhat lower than our pre-war baseline, as the UAE's departure from OPEC+ enables a steady increase in its output towards the 5mn barrel daily production target when trade normalises. Versus this backdrop, the UAE will speed up the building and construction of a brand-new West-East pipeline that need to double the capacity of export through Fujairah.

The May PMI surveys reported output growth reaching its strongest level in three months, driven mainly by enhanced domestic demand. They stay listed below long-run averages, with weak export orders and rate pressures from greater material and transportation costs are a typical style. Overall, we expect 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 decade.