2026 Business Landscape of the GCC

Threats are tilted to the disadvantage. In case of a prolonged conflict, the existing influence on the area will be compoundedthrough elevated energy and food prices, decreasing trade, tourism and remittances, increased financial pressures, and displacement. "The current crisis is a stark reminder of the work ahead for the region: not only to weather shocks, however to restore more resilient economies with stronger macroeconomic basics, innovate and enhance governance, purchase facilities, and improve employment-creating sectors," stated.

With peace and the ideal action, countries can develop the organizations, capabilities and competitive sectors that create opportunities for people." With this long-lasting vision in mind, the report takes a close look at the region's capacity for commercial policy government actions to increase strategic organization activity as a chauffeur of financial growth and task development.

ANSR July GCC PRs 50DR+

Federal governments in the region have actually embraced industrial policy at a high rate in the last decade, typically through sovereign wealth funds and state-owned business, but the results have actually been mixed. The report highlights the important requirement for strong institutions and mindful targeting of policies. "As nations deal with the heavy toll of today dispute, it is essential to also not lose sight of the work required for lasting peace and prosperity," stated.

2026 Regional Market Forecasts

Q2 2026: The ICAEW Economic Update Middle East, is a quarterly financial forecast for the region prepared directly for the finance occupation. The GCC economy faces a marked contraction this year pending details of the US-Iran arrangement to end the war. We anticipate energy circulations, tourism and investor belief to slowly normalise as war disruptions go away.

ANSR July GCC PRs 50DR+

The interim agreement between the US and Iran is a significant step towards reaching a full-blown deal. A full return to normality in the Strait of Hormuz will likely take time, however the risk of a recession-inducing oil price spike has declined. Global GDP is expected to grow by 2.4% this year, 0.2 ppt less than we forecasted three 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), greater 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 failure to avoid the interruption to regional shipping, war-driven infrastructure damage and tourism losses.

Our 2026 outlook for the GCC is weaker than three months ago, with GDP projection to agreement by 2.4% compared to a 0.2% decline projected formerly. We expect 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 incurred in the last couple of months is considerable. Saudi GDP information for Q1 showed 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 changed 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.

2026 GCC Economic Projections

Aside from Oman, all GCC producers in addition to Iran and Iraq have actually suffered substantial oil and gas production losses given that the start of the conflict. Might information reveal local production nearly cut in half 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 assisted prevent an even larger plunge in output.

ANSR July GCC PRs 50DR+

Nevertheless, we forecast GCC oil sector output to agreement by 14.5% this year, which will mark the steepest decline in a number of years. We then anticipate a 23.5% rebound next year, driven mostly by normalisation from a badly depressed base. Oil rates have actually been unstable, easing below $85 per barrel as the interim agreement was revealed.

In the medium term, we expect oil prices to be a little lower than our pre-war baseline, as the UAE's departure from OPEC+ permits for a steady boost in its output towards the 5mn barrel each day production target as soon as trade normalises. Versus this background, the UAE will accelerate 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 greatest level in 3 months, driven largely by enhanced domestic need. Nevertheless, they stay listed below long-run averages, with weak export orders and price pressures from higher material and transportation expenses are a typical theme. In general, we expect a 1.1% contraction in GCC non-energy sectors this year (compared to 4.2% growth pre-war) and a gradual healing over the rest of the decade.