The 2026 Investment Landscape in the GCC

Dangers are slanted to the drawback. In case of a prolonged dispute, the existing effects on the area will be compoundedthrough elevated energy and food costs, decreasing trade, tourist and remittances, increased fiscal pressures, and displacement. "The current crisis is a stark pointer of the work ahead for the region: not only to weather shocks, but to rebuild more resilient economies with more powerful macroeconomic principles, innovate and enhance governance, buy facilities, and enhance employment-creating sectors," stated.

With peace and the right action, countries can develop the institutions, abilities 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 capacity for industrial policy federal government actions to increase tactical business activity as a motorist of economic development and job production.

ANSR July GCC PRs 50DR+

Federal governments in the area have actually embraced industrial policy at a high rate in the last years, often through sovereign wealth funds and state-owned enterprises, however the results have been mixed. The report highlights the crucial need for strong institutions and cautious targeting of policies. "As nations deal with the heavy toll of the present dispute, it is necessary to likewise not forget the work required for long-lasting peace and prosperity," said.

Essential Capital Expansion in the Future

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 marked contraction this year pending information of the US-Iran contract to end the war. We anticipate energy circulations, tourist and investor belief to gradually normalise as war disturbances go away.

ANSR July GCC PRs 50DR+

The interim agreement between the US and Iran is a substantial action towards reaching a full-blown offer. A complete go back to normality in the Strait of Hormuz will likely take time, but the threat of a recession-inducing oil cost spike has decreased. Global GDP is expected to grow by 2.4% this year, 0.2 ppt less than we projected 3 months ago, and 3.1% in 2027.

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

Our 2026 outlook for the GCC is weaker than three months ago, with GDP forecast to agreement by 2.4% compared to a 0.2% decrease predicted previously. We expect Oman and Saudi Arabia to be the least adversely affected by the fallout from the conflict, with both economies continuing to expand this year.

The economic damage sustained in the last couple of months is substantial. Saudi GDP data for Q1 showed growth slowed to 3% y/y, with non-oil activities expanding by 2.9%, the weakest rate because the Covid pandemic. On a seasonally adjusted 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.

Analyzing GCC Investment Potential in 2026

Aside from Oman, all GCC producers along with Iran and Iraq have suffered extensive oil and gas production losses because the start of the conflict. Might information reveal local production nearly cut in half from pre-war levels, with the decrease 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 bigger plunge in output.

ANSR July GCC PRs 50DR+

Nonetheless, we forecast GCC oil sector output to contract by 14.5% this year, which will mark the steepest decrease in numerous years. We then anticipate a 23.5% rebound next year, driven mainly by normalisation from a badly depressed base. Meanwhile, oil prices have been unstable, reducing below $85 per barrel as the interim agreement was announced.

In the medium term, we expect oil prices to be somewhat lower than our pre-war standard, as the UAE's departure from OPEC+ enables for a gradual boost in its output towards the 5mn barrel daily production target when trade normalises. Against this background, the UAE will speed up the building and construction of a brand-new West-East pipeline that must double the capability of export through Fujairah.

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