Critical Stock Capital Insights for Regional Investors

Threats are slanted to the drawback. In the event of a prolonged conflict, the current influence on the region will be compoundedthrough raised energy and food prices, declining trade, tourism and remittances, increased financial pressures, and displacement. "The existing crisis is a stark suggestion of the work ahead for the region: not just to weather shocks, however to rebuild more resistant economies with stronger macroeconomic basics, innovate and enhance governance, buy facilities, and boost employment-creating sectors," stated.

With peace and the right action, countries can develop the institutions, capabilities and competitive sectors that create chances for people." With this long-term vision in mind, the report takes a close take a look at the region's capacity for commercial policy government actions to increase strategic organization activity as a motorist of economic growth and task production.

ANSR July GCC PRs 50DR+

Governments in the region have adopted industrial policy at a high rate in the last years, often through sovereign wealth funds and state-owned business, but the outcomes have been mixed. The report highlights the vital requirement for strong organizations and careful targeting of policies. "As countries deal with the heavy toll of the present dispute, it is essential to also not lose sight of the work needed for long-lasting peace and prosperity," stated.

Foreign Capital Opportunities within the GCC

Q2 2026: The ICAEW Economic Update Middle East, is a quarterly financial forecast for the region prepared straight for the finance occupation. The GCC economy faces a significant contraction this year pending details of the US-Iran agreement to end the war. We expect energy circulations, tourism and investor belief to slowly normalise as war interruptions subside.

ANSR July GCC PRs 50DR+

The interim contract between the US and Iran is a significant action towards reaching a full-blown deal. A complete return to normality in the Strait of Hormuz will likely require time, however the danger of a recession-inducing oil price spike has declined. Worldwide GDP is expected to grow by 2.4% this year, 0.2 ppt less than we projected 3 months earlier, and 3.1% in 2027.

We forecast a 4.1% contraction in Middle East GDP this year (versus forecasted 3.6% expansion before the war), greater than the decrease in the first year of the Covid pandemic. Kuwait, Iran, Iraq and Qatar stick out as the hardest hit, owing to their inability to avoid the interruption to local shipping, war-driven infrastructure damage and tourism losses.

Our 2026 outlook for the GCC is weaker than 3 months earlier, with GDP projection to contract by 2.4% compared to a 0.2% decrease projected formerly. We expect Oman and Saudi Arabia to be the least negatively affected by the fallout from the conflict, with both economies continuing to expand this year.

The financial damage sustained in the last few 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 pace given 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 disturbance hit late in the quarter.

International Capital Prospects across the GCC

Aside from Oman, all GCC producers along with Iran and Iraq have suffered extensive oil and gas production losses since the start of the dispute. May data reveal regional production nearly cut in half 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 prevent an even bigger 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 a number of decades. We then anticipate a 23.5% rebound next year, driven largely by normalisation from a badly depressed base. Oil rates have actually been volatile, easing listed below $85 per barrel as the interim contract was announced.

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

The May PMI surveys reported output growth reaching its strongest level in three months, driven largely by improved domestic need. However, they stay below long-run averages, with weak export orders and price pressures from greater product and transport expenses are a typical style. Overall, we expect 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.