Foreign Investment Opportunities across the Middle East

Threats are tilted to the downside. In the occasion of an extended conflict, the existing effect on the area will be compoundedthrough raised energy and food costs, decreasing trade, tourist and remittances, increased fiscal pressures, and displacement. "The present crisis is a stark pointer of the work ahead for the area: not just to weather shocks, but to restore more resistant economies with stronger macroeconomic principles, innovate and enhance governance, purchase infrastructure, and increase employment-creating sectors," stated.

With peace and the ideal action, countries can construct the organizations, capabilities and competitive sectors that produce opportunities for people." With this long-lasting vision in mind, the report takes a close take a look at the area's capacity for commercial policy federal government actions to increase tactical organization activity as a driver of financial development and task production.

ANSR July GCC PRs 50DR+

Governments in the area have adopted 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 need for strong organizations and cautious targeting of policies. "As countries face the heavy toll of today dispute, it is essential to also not forget the work needed for long-lasting peace and prosperity," stated.

Why Industrial Diversification Can Transform Arabian Markets

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

ANSR July GCC PRs 50DR+

The interim arrangement 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 time, however the risk of a recession-inducing oil cost spike has actually declined. Worldwide GDP is expected to grow by 2.4% this year, 0.2 ppt less than we predicted 3 months ago, and 3.1% in 2027.

We forecast a 4.1% contraction in Middle East GDP this year (versus predicted 3.6% growth before the war), higher than the decrease in the very first year of the Covid pandemic. Kuwait, Iran, Iraq and Qatar stick out as the hardest hit, owing to their inability to avoid the disruption to local shipping, war-driven facilities damage and tourist losses.

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

The economic damage incurred in the last few months is considerable. Saudi GDP data for Q1 revealed growth slowed to 3% y/y, with non-oil activities broadening by 2.9%, the weakest rate 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 hit late in the quarter.

Key Foreign Capital Prospects in the GCC Market

Aside from Oman, all GCC manufacturers in addition to Iran and Iraq have actually suffered substantial oil and gas production losses considering that the start of the conflict. May data show regional 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 actually assisted prevent an even larger 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 mostly by normalisation from a significantly depressed base. Oil prices have actually been unpredictable, easing listed 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 standard, as the UAE's departure from OPEC+ enables a steady boost in its output towards the 5mn barrel each day production target as soon as trade normalises. Against this background, the UAE will accelerate the building and construction of a new West-East pipeline that ought to double the capacity of export through Fujairah.

The May PMI surveys reported output growth reaching its greatest level in 3 months, driven mainly by improved domestic need. They stay below long-run averages, with weak export orders and price pressures from higher material and transportation expenses are a typical theme. In general, 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 decade.