Foreign Investment Opportunities within the GCC

Residential or commercial property rates have actually come under pressure after a period of strong growth, with current information from the Dubai Land Department showing a drop in mortgage deals and cash sales. Nevertheless, we think the danger of a lasting migrant outflow and a severe recession in the real estate sector is low.

As an enduring US-Iran deal takes shape, the fallout from the conflict has tightened up regional financial conditions, exposing vulnerabilities through capital outflows, wider bond spreads, and weaker investor belief. The majority of GCC sovereigns carry fairly little debt and funding risks are therefore limited in the UAE, the central bank's liquidity management has alleviated immediate concerns.

That stated, Bahrain has had the ability 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 information underscore the pressure on regional public financial resources from the conflict.

ANSR July GCC PRs 50DR+

The Future Investment Landscape in Arabia

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 earnings and a surge in spending, especially on subsidies, showing contingency investments connected to the local environment and a velocity of Vision 2030 spending. In Qatar, the crisis brought oil and gas profits to a halt, swelling the budget deficit to the largest because 2017.

GCC inflation dynamics remain uneven, with food prices the main source of upward pressure and inflation in this category fortifying in Kuwait, Oman and Qatar. By contrast, food inflation remains reasonably suppressed in Saudi Arabia, most likely showing the mitigating result of its bigger domestic food production base and higher supply-chain strength.

We continue to see rate pressures as mostly transitory instead of indicative of a sustained inflationary cycle. Appropriately, we expect average inflation to alleviate to 2.1% y/y in 2027 as short-term supply-side pressures dissipate. With near-term inflation elevated and transit through the Strait most likely set to resume slowly, we expect the United States Federal Reserve to keep rate of interest on hold till December, and local rate policies to follow fit.

We expect Iran's GDP to shrink by 10.8% this year (we anticipate a 9.4% contraction three months ago). Oil production and exports, which offer essential profits and FX inflows, have actually been cut by the United States marine blockade, while non-oil activity has been seriously hit. In Iraq, oil exports have actually collapsed to a drip and we're forecasting GDP to contract 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 years of civil war. We expect GDP development to typical 9.6% over 2026-2027, supported by restored investment, especially in banking and energy, financial reforms, and the progressive reopening of local trade links.

Foreign Capital Prospects within the GCC

The World Bank has slashed its 2026 development projection for Middle East economies, saying total GDP development in the area is anticipated to slow from an estimated 3.6% in January to 1.8% for 2026. The closure of the strategic Strait of Hormuz, and destruction of energy and public infrastructure, had interrupted markets, increased financial volatility, and compromised 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 area's aggregate (excluding the Iran) GDP growth will slow down to 1.8 percent in 2026, down from 4.0 percent estimated for 2025. The 2026 projection has actually been devalued by 2.4 percentage points considering that the January forecasts, reflecting the adverse effects of the ongoing conflict.

Saudi Arabia: Projection was devalued by 1.2 percentage points considering that January. Growth is now anticipated 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: Growth projection for the UAE has actually fallen by 2.7 percentage points considering that 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 expected to tape a contraction of 5.7%, down from an approximated development of 5.3%, due to severe obstruction to melted gas supplies. Qatar is an essential gamer in the international energy market, with a global market share of melted gas (LNG) supplies varying between 20% and 21%.

Kuwait relies totally (100%) on the Strait of Hormuz to export its unrefined oil and derivatives. Consequently, closing the strait would indicate a total shutdown of the nation's financial lifeline, immediately halting income inflows to the state spending plan. Bahrain: Development projection for Bahrain's economy has declined by 1.8 percentage points since January.