Foreign Capital Prospects within the GCC

Threats are tilted to the disadvantage. In case of a prolonged conflict, the current impacts on the region will be compoundedthrough elevated energy and food prices, declining trade, tourism and remittances, increased fiscal pressures, and displacement. "The existing crisis is a stark tip of the work ahead for the area: not only to weather shocks, but to reconstruct more resilient economies with stronger macroeconomic fundamentals, innovate and enhance governance, purchase infrastructure, and boost employment-creating sectors," said.

With peace and the right action, countries can build the organizations, abilities and competitive sectors that create opportunities for individuals." With this long-lasting vision in mind, the report takes a close take a look at the area's potential for commercial policy federal government actions to increase strategic service activity as a chauffeur of economic development and job production.

ANSR July GCC PRs 50DR+

Governments in the region have embraced 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 important need for strong organizations and mindful targeting of policies. "As countries face the heavy toll of today dispute, it is crucial to likewise not forget the work needed for lasting peace and success," stated.

International Capital Opportunities within the Middle East

Q2 2026: The ICAEW Economic Update Middle East, is a quarterly financial projection for the region prepared directly for the financing profession. The GCC economy faces a significant contraction this year pending information of the US-Iran agreement to end the war. We expect energy flows, tourism and investor sentiment to gradually normalise as war disturbances diminish.

ANSR July GCC PRs 50DR+

The interim contract between the United States and Iran is a significant step towards reaching a full-blown offer. A complete go back to normality in the Strait of Hormuz will likely take time, but the threat of a recession-inducing oil cost spike has declined. Worldwide GDP is expected to grow by 2.4% this year, 0.2 ppt less than we forecasted 3 months back, and 3.1% in 2027.

We forecast a 4.1% contraction in Middle East GDP this year (versus projected 3.6% expansion before the war), greater than the decline in the very first year of the Covid pandemic. Kuwait, Iran, Iraq and Qatar stand out as the hardest hit, owing to their failure to prevent the interruption to regional shipping, war-driven facilities damage and tourism 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 previously. We expect Oman and Saudi Arabia to be the least adversely impacted by the fallout from the conflict, with both economies continuing to broaden this year.

The financial damage sustained 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 rate 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 struck late in the quarter.

Key International Investment Prospects for the GCC Region

Aside from Oman, all GCC producers as well as Iran and Iraq have actually suffered comprehensive oil and gas production losses because the start of the dispute. May data reveal regional production nearly halved from pre-war levels, with the decrease 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 bigger plunge in output.

ANSR July GCC PRs 50DR+

However, we anticipate GCC oil sector output to contract by 14.5% this year, which will mark the steepest decrease in several years. We then expect a 23.5% rebound next year, driven largely by normalisation from a seriously depressed base. Oil costs have been volatile, alleviating below $85 per barrel as the interim arrangement was announced.

In the medium term, we expect oil costs to be somewhat lower than our pre-war baseline, as the UAE's departure from OPEC+ permits a gradual boost in its output towards the 5mn barrel per day production target as soon as trade normalises. Versus this backdrop, the UAE will accelerate the construction of a brand-new West-East pipeline that ought to double the capacity of export through Fujairah.

The May PMI surveys reported output growth reaching its strongest level in 3 months, driven largely by enhanced domestic need. They stay listed below long-run averages, with weak export orders and price pressures from greater material and transport expenses are a common theme. Overall, we anticipate a 1.1% contraction in GCC non-energy sectors this year (compared to 4.2% development pre-war) and a gradual healing over the rest of the years.