Key International Capital Prospects in the GCC Region

Dangers are tilted to the drawback. In case of a prolonged conflict, the current influence on the region will be compoundedthrough raised energy and food rates, decreasing trade, tourism and remittances, increased fiscal pressures, and displacement. "The present crisis is a plain suggestion of the work ahead for the region: not only to weather shocks, however to rebuild more resilient economies with stronger macroeconomic fundamentals, innovate and enhance governance, buy facilities, and improve employment-creating sectors," stated.

With peace and the right action, nations can construct the organizations, capabilities and competitive sectors that produce chances for people." With this long-term vision in mind, the report takes a close look at the region's potential for industrial policy federal government actions to increase tactical company activity as a driver of financial development and task production.

ANSR July GCC PRs 50DR+

Federal governments in the region have embraced industrial policy at a high rate in the last years, often through sovereign wealth funds and state-owned enterprises, but the outcomes have been blended. The report highlights the crucial requirement for strong organizations and careful targeting of policies. "As nations face the heavy toll of the present conflict, it is very important to also not forget the work needed for lasting peace and prosperity," said.

Future GCC Economic Projections

Q2 2026: The ICAEW Economic Update Middle East, is a quarterly economic forecast for the region prepared straight for the financing occupation. The GCC economy faces a marked contraction this year pending information of the US-Iran agreement to end the war. We anticipate energy circulations, tourist and investor belief to gradually normalise as war disturbances decrease.

ANSR July GCC PRs 50DR+

The interim contract in between the US and Iran is a considerable action towards reaching a full-blown offer. A full go back to normality in the Strait of Hormuz will likely take time, however the threat of a recession-inducing oil cost spike has decreased. International GDP is expected to grow by 2.4% this year, 0.2 ppt less than we predicted 3 months back, and 3.1% in 2027.

We forecast a 4.1% contraction in Middle East GDP this year (versus projected 3.6% growth before the war), greater than the decrease in the very first year of the Covid pandemic. Kuwait, Iran, Iraq and Qatar stick out as the hardest struck, owing to their failure to prevent the disruption to regional shipping, war-driven infrastructure damage and tourism losses.

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

The economic damage incurred in the last couple of months is considerable. Saudi GDP data for Q1 showed growth slowed to 3% y/y, with non-oil activities broadening by 2.9%, the weakest rate considering that 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 disturbance struck late in the quarter.

Top International Capital Prospects in the GCC Market

Aside from Oman, all GCC manufacturers in addition to Iran and Iraq have suffered extensive oil and gas production losses considering that the start of the conflict. May information reveal 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 prevent an even larger plunge in output.

ANSR July GCC PRs 50DR+

We anticipate GCC oil sector output to contract 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 seriously depressed base. On the other hand, oil rates have been volatile, easing listed below $85 per barrel as the interim arrangement was announced.

In the medium term, we expect oil costs to be slightly lower than our pre-war baseline, 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 background, the UAE will accelerate the building of a new West-East pipeline that need to double the capability of export through Fujairah.

The May PMI surveys reported output growth reaching its greatest level in three months, driven mostly by improved domestic demand. However, they remain below long-run averages, with weak export orders and rate pressures from greater material and transportation expenses 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 healing over the remainder of the years.