2026 GCC Economic Projections

Threats are tilted to the disadvantage. In the occasion of an extended conflict, the present influence on the region will be compoundedthrough elevated energy and food costs, declining trade, tourism and remittances, increased financial pressures, and displacement. "The present crisis is a plain tip of the work ahead for the area: not only to weather shocks, however to reconstruct more resilient economies with stronger macroeconomic principles, innovate and enhance governance, purchase infrastructure, and boost employment-creating sectors," stated.

With peace and the best action, countries can build the institutions, abilities and competitive sectors that produce opportunities for people." With this long-lasting vision in mind, the report takes a close take a look at the area's capacity for industrial policy federal government actions to increase tactical company activity as a chauffeur of financial growth and job production.

ANSR July GCC PRs 50DR+

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

Top Foreign Capital Avenues in the GCC Market

Q2 2026: The ICAEW Economic Update Middle East, is a quarterly financial forecast for the region prepared straight for the finance profession. The GCC economy faces a marked contraction this year pending information of the US-Iran arrangement to end the war. We anticipate energy flows, tourism and investor belief to gradually normalise as war disruptions decrease.

ANSR July GCC PRs 50DR+

The interim contract between the United States and Iran is a considerable action towards reaching a full-blown deal. A full return to normality in the Strait of Hormuz will likely take some time, however the risk of a recession-inducing oil cost spike has actually decreased. Global GDP is anticipated to grow by 2.4% this year, 0.2 ppt less than we projected three months ago, 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), greater than the decline in the first year of the Covid pandemic. Kuwait, Iran, Iraq and Qatar stand out as the hardest struck, 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 three months ago, with GDP projection to agreement by 2.4% compared to a 0.2% decrease forecasted previously. We anticipate Oman and Saudi Arabia to be the least negatively affected by the fallout from the dispute, with both economies continuing to expand this year.

The financial damage sustained in the last couple of months is considerable. Saudi GDP data for Q1 showed growth slowed to 3% y/y, with non-oil activities expanding by 2.9%, the weakest speed given 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 interruption hit late in the quarter.

Middle East Stock Trading Patterns for 2026

Aside from Oman, all GCC manufacturers as well as Iran and Iraq have actually suffered comprehensive oil and gas production losses considering that the start of the dispute. May information show local production nearly cut in half 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 assisted avoid an even bigger 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 a number of decades. We then expect a 23.5% rebound next year, driven mostly by normalisation from a severely depressed base. Meanwhile, oil costs have actually been volatile, relieving listed below $85 per barrel as the interim arrangement was revealed.

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 gradual increase in its output towards the 5mn barrel daily production target once trade normalises. Versus this backdrop, the UAE will accelerate the building of a brand-new West-East pipeline that must double the capacity of export through Fujairah.

The May PMI surveys reported output development reaching its strongest level in three months, driven mostly by enhanced domestic need. However, they stay listed below long-run averages, with weak export orders and price pressures from greater product and transport costs 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 steady recovery over the rest of the years.