Top International Investment Avenues for the GCC Region

Threats are tilted to the downside. In case of a prolonged dispute, the current impacts on the area will be compoundedthrough elevated energy and food rates, decreasing trade, tourist and remittances, increased financial pressures, and displacement. "The current crisis is a stark suggestion of the work ahead for the region: not only to weather shocks, however to restore more durable economies with stronger macroeconomic fundamentals, innovate and improve governance, purchase facilities, and improve employment-creating sectors," said.

With peace and the ideal action, nations can develop the institutions, abilities and competitive sectors that create chances for people." With this long-lasting vision in mind, the report takes a close appearance at the region's capacity for industrial policy federal government actions to increase tactical organization activity as a chauffeur of financial development and task production.

ANSR July GCC PRs 50DR+

Federal governments in the area have adopted industrial policy at a high rate in the last decade, frequently through sovereign wealth funds and state-owned enterprises, however the results have actually been blended. The report highlights the crucial requirement for strong institutions and mindful targeting of policies. "As nations face the heavy toll of the present conflict, it is essential to also not forget the work required for long-lasting peace and prosperity," stated.

Top Foreign Investment Avenues for the GCC Region

Q2 2026: The ICAEW Economic Update Middle East, is a quarterly financial forecast for the region prepared straight for the finance profession. The GCC economy faces a significant contraction this year pending details of the US-Iran contract to end the war. We expect energy flows, tourism and financier belief to gradually normalise as war interruptions diminish.

ANSR July GCC PRs 50DR+

The interim contract between the US and Iran is a substantial step towards reaching a full-blown offer. A complete return to normality in the Strait of Hormuz will likely take some time, but the risk of a recession-inducing oil rate spike has actually decreased. Worldwide GDP is expected to grow by 2.4% this year, 0.2 ppt less than we predicted three months back, and 3.1% in 2027.

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

Our 2026 outlook for the GCC is weaker than three months earlier, with GDP forecast to contract by 2.4% compared to a 0.2% decline projected previously. We anticipate Oman and Saudi Arabia to be the least negatively affected by the fallout from the conflict, with both economies continuing to broaden this year.

The financial damage sustained in the last few months is considerable. Saudi GDP information 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 changed basis, GDP contracted 1.2% q/q, driven by a 6.8% fall in oil activities as the Strait of Hormuz interruption struck late in the quarter.

The 2026 Business Climate in the GCC

Aside from Oman, all GCC manufacturers as well as Iran and Iraq have suffered substantial 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 decrease 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 assisted prevent an even bigger plunge in output.

ANSR July GCC PRs 50DR+

Nonetheless, we anticipate GCC oil sector output to agreement by 14.5% this year, which will mark the steepest decline in numerous years. We then anticipate a 23.5% rebound next year, driven mainly by normalisation from a badly depressed base. Oil rates have actually been unstable, relieving listed below $85 per barrel as the interim arrangement was announced.

In the medium term, we anticipate oil prices to be slightly lower than our pre-war standard, as the UAE's departure from OPEC+ permits a steady boost in its output towards the 5mn barrel per day production target once trade normalises. Against this backdrop, the UAE will speed up the construction of a brand-new West-East pipeline that need to double the capacity of export through Fujairah.

The May PMI studies reported output development reaching its greatest level in 3 months, driven largely by enhanced domestic need. However, they remain below long-run averages, with weak export orders and price pressures from greater product and transportation costs are a common theme. In general, we anticipate a 1.1% contraction in GCC non-energy sectors this year (compared to 4.2% growth pre-war) and a gradual recovery over the rest of the years.