Critical Stock Market Strategies for Regional Growth

Property prices have come under pressure after a period of strong development, with current information from the Dubai Land Department showing a drop in home loan deals and cash sales. Nevertheless, we think the danger of an enduring migrant outflow and a serious slump in the realty sector is low.

As a lasting US-Iran deal takes shape, the fallout from the conflict has actually tightened regional monetary conditions, exposing vulnerabilities through capital outflows, larger bond spreads, and weaker investor belief. Most GCC sovereigns bring fairly little financial obligation and funding risks are for that reason limited in the UAE, the reserve bank's liquidity management has alleviated immediate issues.

That stated, Bahrain has actually been able to rely on assistance from neighbours, consisting of Saudi Arabia and the UAE, and it effectively raised $1bn from an oversubscribed sovereign bond sale this month, marking the very first offering from the area considering that the war began. High-frequency fiscal data underscore the stress on regional public finances from the conflict.

ANSR July GCC PRs 50DR+

The Future Investment Climate of the GCC

In Saudi Arabia, the deficit spending more than doubled to SAR125.7 bn, or about 9% of GDP in Q1, driven by a decrease in oil earnings and a surge in costs, especially on aids, reflecting contingency investments connected to the local environment and a velocity of Vision 2030 costs. In Qatar, the crisis brought oil and gas earnings to a halt, swelling the budget plan deficit to the largest considering that 2017.

GCC inflation dynamics remain irregular, with food prices the primary source of upward pressure and inflation in this category strengthening in Kuwait, Oman and Qatar. By contrast, food inflation stays fairly controlled in Saudi Arabia, likely showing the mitigating effect of its larger domestic food production base and higher supply-chain strength.

We continue to view cost pressures as mainly transitory instead of indicative of a sustained inflationary cycle. Accordingly, we expect average inflation to relieve to 2.1% y/y in 2027 as temporary supply-side pressures dissipate. With near-term inflation raised and transit through the Strait likely set to resume gradually, we anticipate the US Federal Reserve to keep interest rates on hold up until December, and local rate policies to do the same.

We anticipate Iran's GDP to diminish by 10.8% this year (we anticipate a 9.4% contraction 3 months ago). Oil production and exports, which provide necessary income and FX inflows, have been curtailed by the United States marine blockade, while non-oil activity has actually been badly hit. In Iraq, oil exports have actually collapsed to a trickle and we're forecasting GDP to agreement by around 22% this year, with a sharp 33% rebound in 2027 as oil exports normalise.

By contrast, Syria continues to reintegrate into the global economy after more than a years of civil war. We expect GDP growth to average 9.6% over 2026-2027, supported by restored investment, especially in banking and energy, monetary reforms, and the gradual reopening of local trade links.

Foreign Capital Prospects within the Middle East

The World Bank has slashed its 2026 growth projection for Middle East economies, stating general GDP development in the area is expected to slow from an approximated 3.6% in January to 1.8% for 2026. The closure of the strategic Strait of Hormuz, and destruction of energy and public facilities, had disrupted markets, increased financial volatility, and weakened the 2026 development outlook, the World Bank Group said in its Economic Update for the Middle East, North Africa, Afghanistan and Pakistan.

The April 2026 World Bank's Macro Hardship Outlook forecasts that the region's aggregate (leaving out the Iran) GDP development will decrease to 1.8 percent in 2026, down from 4.0 percent approximated for 2025. The 2026 projection has actually been devalued by 2.4 percentage points because the January projections, showing the adverse impacts of the ongoing conflict.

Saudi Arabia: Projection was downgraded by 1.2 portion points because January. Development is now expected to slow from 4.3% in 2025 to 3.1% in 2026, noting that Saudi Arabia's outlook stays the strongest amongst Gulf economies. United Arab Emirates: Growth forecast for the UAE has actually fallen by 2.7 portion points since January.

Qatar: Significantly, growth forecast for the Qatari economy has actually seen a sharp decline of 11.0 percentage points considering that January. The economy is now anticipated to tape-record a contraction of 5.7%, down from an estimated growth of 5.3%, due to severe obstruction to liquefied gas materials. Qatar is a key gamer in the worldwide energy market, with an international market share of melted natural gas (LNG) products varying in between 20% and 21%.

Kuwait relies entirely (100%) on the Strait of Hormuz to export its petroleum and derivatives. Closing the strait would suggest a complete shutdown of the country's financial lifeline, right away stopping profits inflows to the state budget plan. Bahrain: Development forecast for Bahrain's economy has decreased by 1.8 percentage points considering that January.