The 2026 Business Landscape of the GCC

Dangers are slanted to the drawback. In case of an extended dispute, the current impacts on the region will be compoundedthrough elevated 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 just to weather shocks, but to restore more durable economies with more powerful macroeconomic principles, innovate and enhance governance, invest in infrastructure, and enhance employment-creating sectors," said.

With peace and the ideal action, countries can construct the institutions, abilities and competitive sectors that develop opportunities for people." With this long-lasting vision in mind, the report takes a close look at the area's potential for industrial policy federal government actions to increase tactical company activity as a motorist of financial growth and task production.

ANSR July GCC PRs 50DR+

Governments in the area have embraced industrial policy at a high rate in the last years, often through sovereign wealth funds and state-owned enterprises, but the results have been blended. The report highlights the critical requirement for strong institutions and mindful targeting of policies. "As nations deal with the heavy toll of the present dispute, it is very important to likewise not forget the work needed for long-lasting peace and success," said.

Navigating Investment Diversification for a 2026 Economy

Q2 2026: The ICAEW Economic Update Middle East, is a quarterly financial projection for the area prepared straight for the financing 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 sentiment to gradually normalise as war interruptions subside.

ANSR July GCC PRs 50DR+

The interim contract in between the United States and Iran is a considerable step towards reaching a full-blown offer. A full return to normality in the Strait of Hormuz will likely take time, however the threat of a recession-inducing oil price spike has decreased. International GDP is expected to grow by 2.4% this year, 0.2 ppt less than we forecasted three months earlier, and 3.1% in 2027.

We anticipate a 4.1% contraction in Middle East GDP this year (versus projected 3.6% growth before the war), greater than the decline in the very first year of the Covid pandemic. Kuwait, Iran, Iraq and Qatar stand apart as the hardest struck, owing to their failure to avoid the interruption to local shipping, war-driven facilities damage and tourism losses.

Our 2026 outlook for the GCC is weaker than three months ago, with GDP projection to contract by 2.4% compared to a 0.2% decrease predicted formerly. We anticipate Oman and Saudi Arabia to be the least adversely impacted by the fallout from the dispute, with both economies continuing to broaden this year.

The economic damage incurred in the last couple of months is significant. Saudi GDP data for Q1 revealed growth slowed to 3% y/y, with non-oil activities expanding 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 hit late in the quarter.

Assessing GCC Market Resilience in 2026

Aside from Oman, all GCC producers along with Iran and Iraq have actually suffered extensive oil and gas production losses given that the start of the conflict. Might information reveal local production nearly cut in half from pre-war levels, with the decline 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 assisted 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 numerous decades. We then expect a 23.5% rebound next year, driven mainly by normalisation from a badly depressed base. On the other hand, oil rates have been unstable, alleviating below $85 per barrel as the interim arrangement was revealed.

In the medium term, we expect oil rates to be a little lower than our pre-war baseline, as the UAE's departure from OPEC+ permits a steady increase in its output towards the 5mn barrel daily production target once trade normalises. Against this backdrop, the UAE will speed up the building of a new West-East pipeline that ought to double the capability of export through Fujairah.

The May PMI studies reported output growth reaching its greatest level in three months, driven largely by enhanced domestic need. However, they remain below long-run averages, with weak export orders and rate pressures from higher product and transportation 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 progressive healing over the rest of the years.