Strategic Economic Expansion for 2026

Risks are slanted to the disadvantage. In case of an extended dispute, the existing effect on the area will be compoundedthrough elevated energy and food rates, decreasing trade, tourist and remittances, increased fiscal pressures, and displacement. "The present crisis is a plain suggestion of the work ahead for the area: not only to weather shocks, but to reconstruct more durable economies with stronger macroeconomic basics, innovate and improve governance, buy facilities, and enhance employment-creating sectors," stated.

With peace and the ideal action, countries can develop the organizations, capabilities and competitive sectors that develop chances for people." With this long-term vision in mind, the report takes a close appearance at the region's potential for commercial policy government actions to increase strategic service activity as a chauffeur of financial growth and task development.

ANSR July GCC PRs 50DR+

Federal governments in the area have adopted industrial policy at a high rate in the last years, typically through sovereign wealth funds and state-owned enterprises, however the outcomes have actually been blended. The report highlights the vital requirement for strong institutions and mindful targeting of policies. "As nations face the heavy toll of today dispute, it is necessary to also not forget the work needed for lasting peace and prosperity," stated.

Mastering Investment Strategies in a Global Economy

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 deals with a marked contraction this year pending details of the US-Iran agreement to end the war. We anticipate energy flows, tourism and financier belief to gradually normalise as war disruptions decrease.

ANSR July GCC PRs 50DR+

The interim contract between the United States and Iran is a substantial step towards reaching a full-blown deal. A full go back to normality in the Strait of Hormuz will likely take time, however the risk of a recession-inducing oil cost spike has actually decreased. International GDP is anticipated to grow by 2.4% this year, 0.2 ppt less than we predicted three months earlier, and 3.1% in 2027.

We anticipate a 4.1% contraction in Middle East GDP this year (versus forecasted 3.6% growth 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 avoid the disturbance to regional shipping, war-driven facilities 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% decline predicted previously. We expect Oman and Saudi Arabia to be the least adversely affected by the fallout from the dispute, with both economies continuing to broaden this year.

The economic damage sustained in the last few months is substantial. Saudi GDP information 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 interruption struck late in the quarter.

International Investment Prospects across the Middle East

Aside from Oman, all GCC manufacturers in addition to Iran and Iraq have actually suffered extensive oil and gas production losses considering that the start of the conflict. Might data reveal regional production almost halved 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 assisted avoid an even bigger plunge in output.

ANSR July GCC PRs 50DR+

We forecast GCC oil sector output to contract by 14.5% this year, which will mark the steepest decrease in several decades. We then expect a 23.5% rebound next year, driven mainly by normalisation from a significantly depressed base. Meanwhile, oil rates have actually been unpredictable, alleviating below $85 per barrel as the interim contract was announced.

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

The May PMI surveys reported output growth reaching its strongest level in 3 months, driven mostly by improved domestic demand. They remain below long-run averages, with weak export orders and price pressures from greater material and transportation expenses are a typical theme. Overall, we anticipate a 1.1% contraction in GCC non-energy sectors this year (compared to 4.2% development pre-war) and a progressive recovery over the remainder of the decade.