Essential Equity Market Insights for GCC Investors

Dangers are slanted to the disadvantage. In the occasion of a prolonged dispute, the present effect on the area will be compoundedthrough raised energy and food prices, declining trade, tourist and remittances, increased fiscal pressures, and displacement. "The current crisis is a plain reminder of the work ahead for the area: not only to weather shocks, but to restore more durable economies with more powerful macroeconomic basics, innovate and enhance governance, purchase facilities, and increase employment-creating sectors," stated.

With peace and the ideal action, countries can build the organizations, abilities and competitive sectors that produce chances for individuals." With this long-term vision in mind, the report takes a close appearance at the region's capacity for industrial policy federal government actions to increase strategic business activity as a motorist of economic development and task creation.

ANSR July GCC PRs 50DR+

Federal governments in the area have actually adopted industrial policy at a high rate in the last years, often through sovereign wealth funds and state-owned enterprises, however the outcomes have been mixed. The report highlights the vital need for strong institutions and cautious targeting of policies. "As nations face the heavy toll of the present conflict, it is crucial to likewise not lose sight of the work required for lasting peace and prosperity," said.

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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 deals with a marked contraction this year pending information of the US-Iran contract to end the war. We expect energy circulations, tourist and investor belief to gradually normalise as war interruptions decrease.

ANSR July GCC PRs 50DR+

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

We anticipate a 4.1% contraction in Middle East GDP this year (versus forecasted 3.6% growth before the war), higher than the decrease in the first year of the Covid pandemic. Kuwait, Iran, Iraq and Qatar stand apart as the hardest struck, owing to their inability to prevent the disturbance to local shipping, war-driven facilities damage and tourism losses.

Our 2026 outlook for the GCC is weaker than 3 months back, with GDP forecast to contract by 2.4% compared to a 0.2% decline forecasted previously. We expect Oman and Saudi Arabia to be the least adversely impacted by the fallout from the dispute, with both economies continuing to broaden this year.

The financial damage sustained in the last few months is substantial. Saudi GDP data for Q1 revealed growth slowed to 3% y/y, with non-oil activities expanding by 2.9%, the weakest rate 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.

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Aside from Oman, all GCC producers in addition to Iran and Iraq have suffered comprehensive oil and gas production losses given that the start of the dispute. May data show regional production almost halved from pre-war levels, with the decline 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 helped avoid an even bigger plunge in output.

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We anticipate GCC oil sector output to contract by 14.5% this year, which will mark the steepest decline in a number of decades. We then anticipate a 23.5% rebound next year, driven mainly by normalisation from a badly depressed base. Meanwhile, oil prices have actually been unpredictable, easing listed below $85 per barrel as the interim contract 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 a steady boost in its output towards the 5mn barrel daily production target once trade normalises. Against this background, the UAE will speed up the construction of a brand-new West-East pipeline that should double the capacity of export through Fujairah.

The May PMI surveys reported output development reaching its greatest level in 3 months, driven mainly by improved domestic need. They remain below long-run averages, with weak export orders and rate pressures from higher material and transport expenses are a typical style. In general, we anticipate a 1.1% contraction in GCC non-energy sectors this year (compared to 4.2% development pre-war) and a gradual healing over the remainder of the years.