Roundup | Read time: 10 minutes

The GCC economy is contracting in 2026, with Oxford Economics forecasting a 2.4% decline in regional GDP, driven primarily by a 14.5% drop in oil output and reduced tourism activity.[2]

This contraction is not uniform. Non-oil sectors in Saudi Arabia and the UAE show positive output, and the region is projected to rebound at 8.1% GDP growth in 2027.[2].

To understand how that rebound takes shape, it helps to examine how three of the region’s largest companies are restructuring now: Saudi Aramco in upstream oil and gas, SABIC in downstream chemicals, and Emaar Properties in real estate.

Saudi Aramco: Capital Discipline and Pipeline Rerouting

Global crude oil prices averaged $69.2 per barrel in 2025, down from $80.2 in 2024, as global supply increased[3]. Aramco’s net profit declined 12% to $93.4 billion as a result.[3]

Despite lower earnings, Aramco maintained its dividend commitments. Free cash flow reached $85.4 billion in 2025, and the board declared a fourth-quarter base dividend of $21.89 billion, a 3.5% year-on-year increase, marking four consecutive years of dividend growth[4]. The company also initiated a $3 billion share buyback program starting in March 2026.[4]

On the operational side, maritime disruptions in the Strait of Hormuz in early 2026 threatened standard export routes[6]. Aramco responded by increasing throughput on its East-West Pipeline to its maximum capacity of 7.0 million barrels per day in the first quarter of 2026, redirecting crude oil exports through Saudi Arabia’s west coast ports.[6]

This pipeline shift kept supply lines intact for international customers. Aramco also reduced its gearing ratio to 3.8% at the end of 2025, down from 4.5% at the end of 2024, and guided 2026 capital expenditure to between $50 billion and $55 billion, focused on high-efficiency projects[4]. New gas production at the Jafurah unconventional field and the Tanajib Gas Plant began in 2025, supporting a target to grow sales gas capacity by approximately 80% by 2030 compared to 2021 levels.[4]

SABIC: Exiting Low-Margin Markets and Rebuilding in Asia

The global chemicals industry entered a prolonged downcycle in 2025, with growth forecasts dropping to 1.9% for 2025 and 2% for 2026, down from an initial expectation of 3.5%, due to overcapacity in basic petrochemicals, high energy costs in Europe, and weak industrial demand.[7]

SABIC’s response was a structured exit from underperforming assets. In early 2026, the company finalized two divestments with a combined enterprise value of $950 million[8]. It sold its European petrochemical business, including manufacturing sites in the United Kingdom and Germany, to investment firm AEQUITA for $500 million, and separately announced the sale of its engineering thermoplastics business in Europe and the Americas.[9]

The capital freed from those exits is moving toward Asia. SABIC’s $6.4 billion integrated petrochemicals complex in Fujian, China, reached approximately 98% completion by the end of the first quarter of 2026, placing the company inside China’s expanding industrial manufacturing market.[8]

Inside Saudi Arabia, SABIC commissioned the Low Temperature Recovery System at its Ibn Zahr facility in 2025, achieving a 99% feedstock recovery rate and adding 50 kilotonnes of annual MTBE production capacity[8]. It also scaled up its MTBE plant at Petrokemya to produce approximately one million metric tonnes per year, one of the largest single-train lines of its kind globally.[8]

Despite a 1% revenue decline to $31 billion in 2025, SABIC’s free cash flow increased 17% to $1.9 billion, driven by tighter working capital management and lower capital expenditure[10]. Its corporate transformation program contributed $623 million to adjusted EBITDA in 2025, with a target of $3 billion in recurring annual EBITDA improvement by 2030.[10]

Emaar Properties: Using Recurring Revenue to Absorb a Market Slowdown

The UAE real estate market, which reached a total valuation of $290 billion in 2025 after growing at a 30% compound annual rate since 2021, is now entering a normalization phase as investor sentiment adjusts to geopolitical risk and shifts in international capital flows.[11]

Emaar recorded $21.9 billion in property sales in 2025, a 40% year-on-year revenue increase, and closed the year with a revenue backlog of AED 155 billion ($42.2 billion), which provides earnings visibility for the next several fiscal years regardless of new booking volumes.[12,13]

To reduce exposure to cyclical residential sales, Emaar started an AED 1.5 billion expansion of the Dubai Mall in 2025, generating stable retail leasing income that cushions margins if off-plan bookings slow in 2026 and 2027[13]. Its 41 hotels, covering more than 10,000 rooms, provide additional liquid cash flows that balance the longer payment timelines of residential developments[13]. Emaar maintained a dividend yield of 7.1% in 2025, and Jefferies notes it trades at a 55% discount to net asset value, making it an attractive position for defensive investors.[11]

What the SME Sector Needs to Know

The strategies of these three companies have a direct consequence for smaller businesses across the GCC.

In secondary markets, including Oman, Bahrain, and Kuwait, non-energy sectors face an average contraction of 1.1% in 2026 before returning to growth in 2027[2]. Unlike Saudi Arabia and the UAE, these economies cannot draw on sovereign wealth funds to sustain public spending during a downcycle.[2]

The clearest route for SMEs is to align with localization programs run by large state-backed companies. Aramco’s In-Kingdom Total Value Add (iktva) program achieved a 70% local procurement rate in 2025, with a target of 75% by 2030, and it requires international contractors to source manufacturing and logistics locally[4]. SMEs that supply these domestic corporate chains are performing better in the current downturn than those dependent on consumer spending or international trade, which faces a 30% drop in regional tourism arrivals.[2]

Governments in Oman and Bahrain are pushing similar domestic procurement policies, which means SMEs that focus on essential regional supply chains, such as manufacturing components and local logistics, are better placed than those serving luxury or export-dependent markets.

The Structural Logic Behind Each Decision

Aramco’s pipeline rerouting, SABIC’s exit from European assets, and Emaar’s investment in retail leasing share one common logic: each company identified where it could generate predictable cash flows during a period of external pressure and allocated capital there, rather than defending the full scope of its previous position.[6,8,13]

For business leaders across the Gulf, the 2026 contraction is creating a structural window. The companies and industries that shed inefficient assets and integrate into domestic supply networks during this period will enter the projected 2027 rebound with leaner cost bases and stronger positions in their core markets[2].

The decisions being made now will determine which firms drive the next phase of GCC growth, and which ones spend the recovery catching up.