Mastering Capital Diversification for a Global Economy

Threats are tilted to the drawback. In the event of an extended conflict, the existing impacts on the region will be compoundedthrough elevated energy and food costs, declining trade, tourist and remittances, increased fiscal pressures, and displacement. "The existing crisis is a plain pointer of the work ahead for the region: not only to weather shocks, however to restore more durable economies with more powerful macroeconomic basics, innovate and improve governance, buy facilities, and improve employment-creating sectors," said.

With peace and the ideal action, countries can construct the institutions, capabilities and competitive sectors that produce opportunities for individuals." With this long-lasting vision in mind, the report takes a close look at the region's potential for industrial policy federal government actions to increase tactical service activity as a driver of financial development and task production.

ANSR July GCC PRs 50DR+

Federal governments in the area have embraced industrial policy at a high rate in the last years, frequently through sovereign wealth funds and state-owned business, however the results have been blended. The report highlights the crucial requirement for strong organizations and cautious targeting of policies. "As countries face the heavy toll of today conflict, it is very important to also not lose sight of the work required for long-lasting peace and prosperity," said.

Future-Proofing Middle East Portfolios for 2026 Shifts

Q2 2026: The ICAEW Economic Update Middle East, is a quarterly financial projection for the area prepared straight for the finance profession. The GCC economy faces a significant contraction this year pending information of the US-Iran agreement to end the war. We expect energy circulations, tourist and financier sentiment to slowly normalise as war disruptions go away.

ANSR July GCC PRs 50DR+

The interim agreement in 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 some time, but the threat of a recession-inducing oil rate spike has actually decreased. Global 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% growth 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 struck, owing to their inability to prevent the disruption to regional shipping, war-driven infrastructure damage and tourist losses.

Our 2026 outlook for the GCC is weaker than 3 months ago, with GDP forecast to agreement by 2.4% compared to a 0.2% decline projected formerly. We expect Oman and Saudi Arabia to be the least negatively impacted by the fallout from the dispute, with both economies continuing to expand this year.

The financial damage incurred in the last couple of months is significant. Saudi GDP information for Q1 showed development slowed to 3% y/y, with non-oil activities broadening by 2.9%, the weakest speed since 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 interruption struck late in the quarter.

GCC Equity Trading Trends in 2026

Aside from Oman, all GCC producers in addition to Iran and Iraq have suffered substantial oil and gas production losses since the start of the conflict. Might information reveal regional production nearly halved 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 assisted avoid an even larger plunge in output.

ANSR July GCC PRs 50DR+

We forecast GCC oil sector output to agreement by 14.5% this year, which will mark the steepest decrease in a number of decades. We then expect a 23.5% rebound next year, driven mostly by normalisation from a seriously depressed base. Oil rates have actually been unpredictable, easing below $85 per barrel as the interim arrangement was revealed.

In the medium term, we anticipate oil prices to be a little lower than our pre-war baseline, as the UAE's departure from OPEC+ enables a gradual boost in its output towards the 5mn barrel per day production target once trade normalises. Against this background, the UAE will accelerate the construction of a new West-East pipeline that ought to double the capability of export through Fujairah.

The May PMI studies reported output development reaching its strongest level in three months, driven largely by improved domestic demand. They remain listed below long-run averages, with weak export orders and rate pressures from greater material and transportation expenses are a common style. In general, 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.