Essential Industrial Expansion for 2026

Home costs have come under pressure after a period of strong growth, with current information from the Dubai Land Department revealing a drop in mortgage deals and money sales. We believe the threat of a lasting migrant outflow and an extreme recession in the real estate sector is low.

As a long lasting US-Iran offer takes shape, the fallout from the conflict has tightened local monetary conditions, exposing vulnerabilities through capital outflows, larger bond spreads, and weaker financier sentiment. Most GCC sovereigns carry reasonably little debt and funding threats are therefore restricted in the UAE, the main bank's liquidity management has actually eased instant issues.

That stated, Bahrain has had the ability to count on support from neighbours, including 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 since the war started. High-frequency financial data highlight the stress on local public finances from the dispute.

ANSR July GCC PRs 50DR+

Assessing GCC Market Resilience for 2026

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 income and a rise in costs, especially on subsidies, showing contingency expenses tied to the local environment and an acceleration of Vision 2030 costs. In Qatar, the crisis brought oil and gas revenue to a halt, swelling the budget deficit to the largest because 2017.

GCC inflation characteristics stay uneven, with food rates the primary source of upward pressure and inflation in this classification fortifying in Kuwait, Oman and Qatar. By contrast, food inflation stays reasonably subdued in Saudi Arabia, likely showing the mitigating result of its bigger domestic food production base and greater supply-chain resilience.

We continue to view rate pressures as mainly transitory instead of indicative of a sustained inflationary cycle. Appropriately, we expect typical inflation to reduce to 2.1% y/y in 2027 as temporary supply-side pressures dissipate. With near-term inflation elevated and transit through the Strait most likely set to resume slowly, we anticipate the United States Federal Reserve to keep rates of interest on hold up until December, and regional rate policies to follow fit.

We expect Iran's GDP to shrink by 10.8% this year (we forecast a 9.4% contraction 3 months ago). Oil production and exports, which supply necessary revenue and FX inflows, have been reduced by the US marine blockade, while non-oil activity has actually been badly struck. In Iraq, oil exports have actually collapsed to a drip and we're anticipating 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 worldwide economy after more than a decade of civil war. We expect GDP growth to typical 9.6% over 2026-2027, supported by restored financial investment, especially in banking and energy, monetary reforms, and the progressive resuming of regional trade links.

International Capital Opportunities across the GCC

The World Bank has slashed its 2026 development projection for Middle East economies, stating overall GDP growth in the area is anticipated to slow from an estimated 3.6% in January to 1.8% for 2026. The closure of the tactical Strait of Hormuz, and destruction of energy and public facilities, had interfered with markets, increased monetary volatility, and weakened the 2026 development outlook, the World Bank Group stated 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 (excluding the Iran) GDP growth will slow down to 1.8 percent in 2026, down from 4.0 percent approximated for 2025. The 2026 forecast has actually been downgraded by 2.4 percentage points considering that the January forecasts, reflecting the adverse results of the ongoing dispute.

Saudi Arabia: Projection was devalued by 1.2 portion points given that January. Development is now anticipated 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: Notably, growth projection for the Qatari economy has actually seen a sharp decrease of 11.0 percentage points because January. The economy is now expected to record a contraction of 5.7%, below an estimated development of 5.3%, due to serious obstruction to liquefied gas materials. Qatar is a key player in the international energy market, with an international market share of melted gas (LNG) supplies ranging between 20% and 21%.

Kuwait relies completely (100%) on the Strait of Hormuz to export its petroleum and derivatives. As a result, closing the strait would indicate a total shutdown of the nation's financial lifeline, right away stopping earnings inflows to the state budget. Bahrain: Growth forecast for Bahrain's economy has decreased by 1.8 percentage points since January.