Global Investment Opportunities across the Middle East

Threats are slanted to the disadvantage. In the occasion of a prolonged conflict, the existing influence on the area will be compoundedthrough elevated energy and food rates, declining trade, tourist and remittances, increased fiscal pressures, and displacement. "The existing crisis is a stark pointer of the work ahead for the region: not only to weather shocks, but to restore more durable economies with more powerful macroeconomic principles, innovate and enhance governance, purchase infrastructure, and improve employment-creating sectors," stated.

With peace and the ideal action, nations can build the organizations, abilities and competitive sectors that produce chances for people." With this long-term vision in mind, the report takes a close look at the area's potential for industrial policy federal government actions to increase strategic service activity as a chauffeur of financial growth and job development.

ANSR July GCC PRs 50DR+

Governments in the region have actually adopted industrial policy at a high rate in the last decade, often through sovereign wealth funds and state-owned enterprises, but the results have been blended. The report highlights the vital requirement for strong organizations and careful targeting of policies. "As nations deal with the heavy toll of the present dispute, it is necessary to likewise not lose sight of the work needed for long-lasting peace and prosperity," said.

2026 Investment Landscape of Arabia

Q2 2026: The ICAEW Economic Update Middle East, is a quarterly financial projection for the region prepared directly for the financing occupation. The GCC economy deals with a significant contraction this year pending details of the US-Iran contract to end the war. We anticipate energy circulations, tourist and investor sentiment to slowly normalise as war interruptions decrease.

ANSR July GCC PRs 50DR+

The interim contract between the US and Iran is a substantial step towards reaching a full-blown deal. A complete go back to normality in the Strait of Hormuz will likely take time, but the risk of a recession-inducing oil cost spike has actually decreased. Worldwide 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 projected 3.6% expansion before the war), higher than the decrease in the 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 tourist losses.

Our 2026 outlook for the GCC is weaker than three months earlier, with GDP forecast to agreement by 2.4% compared to a 0.2% decrease projected previously. 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 financial damage incurred in the last couple of months is significant. Saudi GDP data for Q1 revealed development slowed to 3% y/y, with non-oil activities expanding 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 struck late in the quarter.

Analyzing Regional Investment Potential in 2026

Aside from Oman, all GCC manufacturers in addition to Iran and Iraq have suffered substantial oil and gas production losses because the start of the conflict. Might information show regional production almost 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 helped prevent 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 several years. We then expect a 23.5% rebound next year, driven mainly by normalisation from a seriously depressed base. Meanwhile, oil rates have been volatile, easing below $85 per barrel as the interim arrangement was announced.

In the medium term, we anticipate oil costs to be slightly lower than our pre-war standard, as the UAE's departure from OPEC+ enables a progressive boost in its output towards the 5mn barrel each day production target as soon as trade normalises. Versus this background, the UAE will accelerate the building of a new West-East pipeline that should double the capacity of export through Fujairah.

The May PMI studies reported output growth reaching its strongest level in three months, driven mainly by enhanced domestic need. They remain below long-run averages, with weak export orders and price pressures from greater product and transport expenses are a common theme. Overall, we expect a 1.1% contraction in GCC non-energy sectors this year (compared to 4.2% growth pre-war) and a steady healing over the remainder of the decade.