Key Equity Market Strategies for Regional Investors

Threats are tilted to the downside. In the event of an extended conflict, the present influence on the region will be compoundedthrough raised energy and food prices, declining trade, tourist and remittances, increased fiscal pressures, and displacement. "The present crisis is a plain suggestion of the work ahead for the area: not only to weather shocks, but to rebuild more resistant economies with more powerful macroeconomic basics, innovate and improve governance, purchase facilities, and enhance employment-creating sectors," said.

With peace and the right action, countries can develop the institutions, capabilities 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 potential for commercial policy federal government actions to increase strategic business activity as a driver of economic growth and job creation.

ANSR July GCC PRs 50DR+

Federal governments in the region have embraced commercial policy at a high rate in the last decade, frequently through sovereign wealth funds and state-owned business, but the outcomes have been mixed. The report highlights the crucial requirement for strong organizations and cautious targeting of policies. "As countries face the heavy toll of the present conflict, it is necessary to likewise not lose sight of the work required for lasting peace and prosperity," said.

Why Economic Shifts Can Shape GCC Markets

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 marked contraction this year pending details of the US-Iran agreement to end the war. We expect energy circulations, tourist and financier sentiment to slowly normalise as war interruptions diminish.

ANSR July GCC PRs 50DR+

The interim arrangement between the United States 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 time, however the danger of a recession-inducing oil rate spike has actually declined. International GDP is anticipated to grow by 2.4% this year, 0.2 ppt less than we forecasted 3 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 very first year of the Covid pandemic. Kuwait, Iran, Iraq and Qatar stand apart as the hardest hit, owing to their inability to prevent the disturbance to local shipping, war-driven infrastructure damage and tourism losses.

Our 2026 outlook for the GCC is weaker than 3 months back, with GDP projection to agreement by 2.4% compared to a 0.2% decline predicted 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 incurred in the last few months is significant. Saudi GDP information for Q1 revealed growth slowed to 3% y/y, with non-oil activities broadening by 2.9%, the weakest pace 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.

Future GCC Financial Projections

Aside from Oman, all GCC manufacturers in addition to Iran and Iraq have actually suffered comprehensive oil and gas production losses since the start of the dispute. Might data reveal local production almost cut in half 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 forecast GCC oil sector output to agreement by 14.5% this year, which will mark the steepest decrease in a number of decades. We then anticipate a 23.5% rebound next year, driven largely by normalisation from a badly depressed base. Meanwhile, oil prices have been unpredictable, relieving listed below $85 per barrel as the interim agreement was revealed.

In the medium term, we expect oil rates to be somewhat lower than our pre-war standard, as the UAE's departure from OPEC+ enables a steady increase in its output towards the 5mn barrel daily production target once trade normalises. Against this background, the UAE will accelerate the building 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 mostly by improved domestic need. However, they stay below long-run averages, with weak export orders and price pressures from higher product and transport expenses are a common style. Overall, we expect a 1.1% contraction in GCC non-energy sectors this year (compared to 4.2% development pre-war) and a gradual recovery over the rest of the years.