International Capital Opportunities across the Middle East

Risks are tilted to the disadvantage. In the event of an extended dispute, the existing influence on the area will be compoundedthrough elevated energy and food costs, decreasing trade, tourism and remittances, increased fiscal pressures, and displacement. "The current crisis is a stark pointer of the work ahead for the region: not just to weather shocks, but to reconstruct more resistant economies with stronger macroeconomic principles, innovate and enhance governance, buy facilities, and improve employment-creating sectors," stated.

With peace and the ideal action, nations can construct the institutions, capabilities and competitive sectors that produce chances for people." With this long-lasting vision in mind, the report takes a close take a look at the area's potential for industrial policy government actions to increase strategic company activity as a motorist of economic development and task creation.

ANSR July GCC PRs 50DR+

Federal governments in the region have embraced commercial policy at a high rate in the last years, typically through sovereign wealth funds and state-owned business, but the results have actually been blended. The report highlights the important requirement for strong organizations and mindful targeting of policies. "As countries face the heavy toll of today dispute, it is necessary to also not lose sight of the work needed for lasting peace and prosperity," said.

The Future Investment Landscape in the GCC

Q2 2026: The ICAEW Economic Update Middle East, is a quarterly economic projection for the region prepared directly for the financing occupation. The GCC economy deals with a marked contraction this year pending details of the US-Iran contract to end the war. We expect energy circulations, tourism and investor belief to slowly normalise as war disruptions subside.

ANSR July GCC PRs 50DR+

The interim contract between the US and Iran is a significant step towards reaching a full-blown offer. A full return to normality in the Strait of Hormuz will likely require time, but the risk of a recession-inducing oil cost spike has decreased. Worldwide GDP is expected to grow by 2.4% this year, 0.2 ppt less than we predicted three months ago, 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 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 regional shipping, war-driven infrastructure damage and tourism losses.

Our 2026 outlook for the GCC is weaker than three months back, with GDP projection to agreement by 2.4% compared to a 0.2% decline predicted previously. We anticipate Oman and Saudi Arabia to be the least negatively impacted by the fallout from the conflict, with both economies continuing to broaden this year.

The economic damage incurred in the last few months is considerable. Saudi GDP information 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 changed basis, GDP contracted 1.2% q/q, driven by a 6.8% fall in oil activities as the Strait of Hormuz disruption struck late in the quarter.

Securing GCC Portfolios against 2026 Trends

Aside from Oman, all GCC manufacturers along with Iran and Iraq have actually suffered comprehensive oil and gas production losses because the start of the dispute. May data show local production nearly halved 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 assisted avoid 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 decline in numerous decades. We then anticipate a 23.5% rebound next year, driven mostly by normalisation from a severely depressed base. Meanwhile, oil costs have actually been unpredictable, relieving below $85 per barrel as the interim arrangement was revealed.

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

The May PMI studies reported output growth reaching its greatest level in three months, driven mainly by enhanced domestic need. However, they stay listed below long-run averages, with weak export orders and cost pressures from greater product and transport expenses are a common style. Overall, we anticipate a 1.1% contraction in GCC non-energy sectors this year (compared to 4.2% growth pre-war) and a gradual healing over the remainder of the years.