Evaluating GCC Market Potential for 2026

Risks are slanted to the downside. In case of an extended dispute, the existing effect on the region will be compoundedthrough elevated energy and food prices, decreasing trade, tourism and remittances, increased financial pressures, and displacement. "The existing crisis is a plain suggestion of the work ahead for the area: not only to weather shocks, but to reconstruct more durable economies with more powerful macroeconomic principles, innovate and enhance governance, purchase facilities, and boost employment-creating sectors," stated.

With peace and the ideal action, countries can construct the institutions, abilities and competitive sectors that produce opportunities for individuals." With this long-lasting vision in mind, the report takes a close take a look at the region's potential for commercial policy government actions to increase tactical service activity as a chauffeur of financial development and job production.

ANSR July GCC PRs 50DR+

Federal governments in the area have embraced commercial policy at a high rate in the last years, typically through sovereign wealth funds and state-owned business, however the outcomes have been blended. The report highlights the vital need for strong institutions and mindful targeting of policies. "As nations face the heavy toll of today conflict, it is very important to likewise not lose sight of the work needed for long-lasting peace and prosperity," said.

Middle East Equity Market Trends for 2026

Q2 2026: The ICAEW Economic Update Middle East, is a quarterly economic forecast for the area prepared straight for the finance profession. The GCC economy faces a significant contraction this year pending details of the US-Iran arrangement to end the war. We expect energy circulations, tourism and financier belief to slowly normalise as war interruptions decrease.

ANSR July GCC PRs 50DR+

The interim agreement between the US and Iran is a substantial action towards reaching a full-blown deal. A complete return to normality in the Strait of Hormuz will likely take time, however the risk of a recession-inducing oil rate spike has actually decreased. Global GDP is anticipated to grow by 2.4% this year, 0.2 ppt less than we predicted 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), greater than the decline in the first year of the Covid pandemic. Kuwait, Iran, Iraq and Qatar stand apart as the hardest hit, owing to their failure to avoid the interruption to regional shipping, war-driven facilities damage and tourist losses.

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

The financial damage incurred in the last few months is significant. Saudi GDP information for Q1 revealed development slowed to 3% y/y, with non-oil activities expanding by 2.9%, the weakest pace considering 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 hit late in the quarter.

Strategic Industrial Expansion for the Future

Aside from Oman, all GCC manufacturers as well as Iran and Iraq have actually suffered comprehensive oil and gas production losses since the start of the dispute. Might data show 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 actually helped avoid an even larger plunge in output.

ANSR July GCC PRs 50DR+

We forecast GCC oil sector output to contract 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 largely by normalisation from a badly depressed base. Oil rates have actually been volatile, relieving listed below $85 per barrel as the interim arrangement was revealed.

In the medium term, we expect oil prices to be slightly lower than our pre-war standard, as the UAE's departure from OPEC+ enables a progressive increase in its output towards the 5mn barrel per day production target when trade normalises. Against this backdrop, the UAE will accelerate the construction of a brand-new West-East pipeline that should double the capability of export through Fujairah.

The May PMI surveys reported output growth reaching its strongest level in 3 months, driven largely by improved domestic demand. They stay listed below long-run averages, with weak export orders and price pressures from higher product and transport costs are a common style. In general, we expect a 1.1% contraction in GCC non-energy sectors this year (compared to 4.2% growth pre-war) and a progressive recovery over the rest of the years.