Essential Equity Market Strategies for Regional Growth

Threats are tilted to the downside. In the occasion of a prolonged dispute, the present impacts on the area will be compoundedthrough elevated energy and food rates, decreasing trade, tourist and remittances, increased fiscal pressures, and displacement. "The current crisis is a plain reminder of the work ahead for the region: not only to weather shocks, but to reconstruct more durable economies with stronger macroeconomic basics, innovate and improve governance, purchase facilities, and boost employment-creating sectors," said.

With peace and the right action, nations can develop the institutions, capabilities and competitive sectors that produce chances for people." With this long-term vision in mind, the report takes a close look at the area's capacity for commercial policy federal government actions to increase strategic service activity as a motorist of financial development and task production.

ANSR July GCC PRs 50DR+

Federal governments in the area have actually embraced commercial policy at a high rate in the last decade, often through sovereign wealth funds and state-owned business, however the outcomes have been mixed. The report highlights the critical requirement for strong organizations and careful targeting of policies. "As countries deal with the heavy toll of today conflict, it is necessary to likewise not forget the work required for lasting peace and success," said.

How Economic Shifts Can Transform GCC Markets

Q2 2026: The ICAEW Economic Update Middle East, is a quarterly economic forecast for the region prepared directly for the finance profession. The GCC economy deals with a significant contraction this year pending information of the US-Iran arrangement to end the war. We expect energy flows, tourism and financier sentiment to slowly normalise as war disruptions subside.

ANSR July GCC PRs 50DR+

The interim arrangement between the US and Iran is a considerable action towards reaching a full-blown deal. A full go back to normality in the Strait of Hormuz will likely take some time, however the danger of a recession-inducing oil price spike has actually decreased. International GDP is expected to grow by 2.4% this year, 0.2 ppt less than we forecasted three months earlier, 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 decrease in the first year of the Covid pandemic. Kuwait, Iran, Iraq and Qatar stand out as the hardest hit, owing to their inability to prevent the disruption to local shipping, war-driven facilities damage and tourist losses.

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

The financial damage incurred in the last few 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 because 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.

Driving Industrial Success through Strategic Diversification

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 dispute. May data reveal regional production nearly 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 prevent an even larger plunge in output.

ANSR July GCC PRs 50DR+

We anticipate GCC oil sector output to agreement by 14.5% this year, which will mark the steepest decrease in several years. We then anticipate a 23.5% rebound next year, driven mostly by normalisation from a badly depressed base. On the other hand, oil costs have actually been unpredictable, reducing listed below $85 per barrel as the interim arrangement was announced.

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

The May PMI studies reported output growth reaching its greatest level in 3 months, driven mostly by enhanced domestic demand. However, they stay below long-run averages, with weak export orders and price pressures from higher product 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% growth pre-war) and a gradual recovery over the remainder of the decade.