Essential Stock Market Insights for GCC Growth

Home rates have come under pressure after a period of strong development, with current data from the Dubai Land Department revealing a drop in mortgage deals and cash sales. We think the risk of a long lasting migrant outflow and a severe recession in the genuine estate sector is low.

As a long lasting US-Iran deal takes shape, the fallout from the conflict has tightened local financial conditions, exposing vulnerabilities through capital outflows, broader bond spreads, and weaker investor sentiment. The majority of GCC sovereigns carry fairly little financial obligation and financing threats are therefore limited in the UAE, the main bank's liquidity management has relieved immediate issues.

That stated, Bahrain has actually been able to depend on support from neighbours, consisting of Saudi Arabia and the UAE, and it successfully 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 pressure on local public finances from the dispute.

ANSR July GCC PRs 50DR+

Driving Non-Oil Success via Strategic Diversification

In Saudi Arabia, the deficit spending more than doubled to SAR125.7 bn, or about 9% of GDP in Q1, driven by a decline in oil profits and a surge in spending, especially on aids, showing contingency expenses connected to the local environment and an acceleration of Vision 2030 spending. In Qatar, the crisis brought oil and gas revenue to a stop, swelling the budget deficit to the largest considering that 2017.

GCC inflation characteristics remain unequal, with food prices the primary source of upward pressure and inflation in this classification conditioning in Kuwait, Oman and Qatar. By contrast, food inflation stays relatively suppressed in Saudi Arabia, likely showing the mitigating impact of its larger domestic food production base and greater supply-chain strength.

We continue to view rate pressures as mainly transitory rather than a sign of a continual inflationary cycle. Accordingly, we anticipate average inflation to relieve to 2.1% y/y in 2027 as short-lived 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 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 three months ago). Oil production and exports, which supply vital profits and FX inflows, have actually been reduced by the United States naval blockade, while non-oil activity has been significantly hit. In Iraq, oil exports have actually collapsed to a trickle 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 prepare for GDP development to average 9.6% over 2026-2027, supported by restored financial investment, particularly in banking and energy, financial reforms, and the progressive resuming of regional trade links.

Positioning GCC Investments for 2026 Shifts

The World Bank has actually slashed its 2026 growth projection for Middle East economies, saying general GDP growth in the region is anticipated to slow from an approximated 3.6% in January to 1.8% for 2026. The closure of the tactical Strait of Hormuz, and damage of energy and public infrastructure, had actually interrupted markets, increased financial volatility, and deteriorated 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 anticipates that the region's aggregate (leaving out the Iran) GDP growth will slow down to 1.8 percent in 2026, below 4.0 percent approximated for 2025. The 2026 forecast has actually been devalued by 2.4 percentage points since the January projections, showing the adverse results of the continuous conflict.

Saudi Arabia: Projection was downgraded by 1.2 portion points considering that January. Growth is now expected to slow from 4.3% in 2025 to 3.1% in 2026, keeping in mind that Saudi Arabia's outlook stays the strongest among Gulf economies. United Arab Emirates: Development projection for the UAE has fallen by 2.7 portion points given that January.

Qatar: Especially, growth projection for the Qatari economy has actually seen a sharp decrease of 11.0 portion points because January. The economy is now anticipated to tape a contraction of 5.7%, below an estimated growth of 5.3%, due to severe obstruction to liquefied gas products. Qatar is a key player in the international energy market, with a worldwide market share of liquefied gas (LNG) supplies varying between 20% and 21%.

Kuwait relies completely (100%) on the Strait of Hormuz to export its petroleum and derivatives. Closing the strait would indicate a total shutdown of the nation's financial lifeline, immediately halting profits inflows to the state budget plan. Bahrain: Growth forecast for Bahrain's economy has actually decreased by 1.8 percentage points because January.