GCC economy to shrink in 2026 before 8.1pc growth
The UAE and wider Gulf economies are expected to bounce back strongly in 2027 after absorbing the impact of regional conflict, with GCC GDP forecast to expand by 8.1 percent.
This would happen as energy trade routes normalise, tourism demand returns and business confidence improves, according to a new economic report.
The recovery forecast follows an expected 2.4 percent contraction in GCC GDP in 2026, as disruption to energy exports, travel and investor sentiment weighs on regional activity, according to the latest Economic Insight: Middle East Q2 2026 report by ICAEW and Oxford Economics.
The report’s baseline scenario assumes a ceasefire agreemen is reached by the end of July 2026 and that operations through the Strait of Hormuz return to normal by the end of the year.
UAE banks, hotels and airlines could gain
A US-Iran deal could give the UAE economy a fresh lift by easing pressure on trade routes and restoring travel confidence.
Investors, tourists, airlines, shipping companies and developers all moved into a more defensive mode during the conflict, especially when the Strait of Hormuz became a live risk for energy and cargo flows. A lasting de-escalation would help unwind that risk premium and allow companies to return to expansion planning.
The early signs of optimism are already visible in parts of the market. ADNOC Logistics & Services on Monday upgraded its full-year 2026 guidance, citing stronger performance in its Shipping segment and improved material handling volumes in offshore contracting.
The Abu Dhabi-listed company now expects net profit to grow in the high 60 percent range this year, compared with an earlier forecast of mid-to-high-teens growth. EBITDA is now expected to rise in the high 20 percent range, up from previous guidance for mid-to-high single-digit growth, while revenue is expected to post low single-digit growth instead of a low-to-mid single-digit decline.
Bahrain EDB reinforces GCC-Asia ties
The Bahrain Economic Development Board (Bahrain EDB) has concluded a strategic five-day visit to China and Hong Kong, reinforcing the kingdom’s economic ties with one of the world’s most dynamic regions.
Held from June 22 to 26, the visit featured a series of high-level engagements with investors, business leaders, and strategic partners aimed at strengthening bilateral economic co-operation and exploring new avenues for investment.
Activities commenced in Dalian, China, where the Bahrain EDB participated in the World Economic Forum’s (WEF) Annual Meeting of the New Champions 2026.
The forum provided a key platform to exchange insights on the economic outlook across emerging markets, with a particular focus on China and the wider Asia-Pacific region.
On the sidelines, the EDB hosted strategic meetings with investors and industry stakeholders to showcase investment opportunities across the kingdom’s priority sectors.
The delegation, led by Sustainable Development Minister and Bahrain EDB Chief Executive Officer Noor Al Khulaif, also participated in the 16th Asia Pacific Family Office Forum in Hong Kong, organised by Campden Wealth.
GCC sovereign wealth funds are tackling a fragmented global economy?
The global landscape is fragmenting. Protectionism and geopolitical tensions are rising, major powers are realigning, and the cumulative effect of higher tariffs, restrictions on capital flows, energy market volatility and shifting trade dynamics is weighing on growth. The US-Iran conflict and the resulting disruption to trade and energy flows through the Strait of Hormuz, a critical artery for global commerce, have deepened the strain.
Governments and policy-makers must now build more adaptive supply chains to safeguard their economies. Those that pull ahead will deploy capital with purpose, align policy to let it cross borders and treat connectivity as a multiplier for growth.
One response has been a sharper focus on sovereign wealth funds (SWFs) – state-owned investment institutions – to boost investment in high-growth sectors, open up global partnerships and steady economies through a period of geopolitical uncertainty.
Gulf economy: the costs of closure
The near-total blockade of the Strait since the beginning of the U.S.-Israeli attack on Iran in late February cut off, most obviously, the export of oil. At pre-war levels, this was roughly 14.9 million barrels per day (bpd) of crude oil and about 4.8 million bpd of refined oil products, including liquefied petroleum gas, together accounting for roughly 20 percent of global supply. Approximately 20 percent of global liquefied natural gas (LNG), mostly from Qatar with some from the United Arab Emirates (UAE), also moved through the Strait, just as major export expansions were underway.
Kuwait, UAE talk boosting industrial, economic cooperation
Minister of Commerce and Industry Osama Bodai met on Sunday with UAE Minister of Industry and Advanced Technology Dr. Sultan Al-Jaber to discuss ways of enhancing bilateral cooperation in the industrial and economic sectors.
According to a statement issued by the Public Authority for Industry (PAI), the meeting was attended by Acting Director General of the PAI Shamlan Al-Jaheidli and a number of the authority’s officials.
The statement said the two sides discussed the importance of strengthening the resilience of supply chains in the oil and industrial sectors to ensure the continuity of production during exceptional circumstances, while drawing on lessons learned from the COVID-19 pandemic and recent geopolitical developments.
They also reviewed the essential needs of each country in support of greater industrial and economic integration between Kuwait and the United Arab Emirates. The discussions further focused on mechanisms to ensure uninterrupted production in vital sectors, particularly food and pharmaceuticals, and on enhancing preparedness to address crises and exceptional situations that may affect supply chains and production.