Future Business Landscape in Arabia

Residential or commercial property costs have come under pressure after a period of strong development, with recent information from the Dubai Land Department revealing a drop in home loan deals and money sales. We think the danger of an enduring migrant outflow and a severe recession in the real estate sector is low.

As a lasting US-Iran deal takes shape, the fallout from the dispute has tightened regional financial conditions, exposing vulnerabilities through capital outflows, broader bond spreads, and weaker financier sentiment. The majority of GCC sovereigns bring fairly little debt and financing dangers are therefore restricted in the UAE, the reserve bank's liquidity management has minimized instant issues.

That said, Bahrain has had the ability to rely 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 considering that the war began. High-frequency fiscal data highlight the pressure on local public finances from the conflict.

ANSR July GCC PRs 50DR+

GCC Stock Market Patterns for 2026

In Saudi Arabia, the spending plan deficit 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, reflecting contingency outlays tied to the local environment and a velocity of Vision 2030 costs. In Qatar, the crisis brought oil and gas income to a stop, swelling the deficit spending to the biggest given that 2017.

GCC inflation characteristics remain uneven, with food costs the main source of upward pressure and inflation in this classification fortifying in Kuwait, Oman and Qatar. By contrast, food inflation remains reasonably controlled in Saudi Arabia, likely reflecting the mitigating effect of its bigger domestic food production base and higher supply-chain resilience.

We continue to see cost pressures as mainly temporal instead of a sign of a sustained inflationary cycle. Accordingly, we anticipate 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 likely set to resume slowly, we expect the United States Federal Reserve to keep rates of interest on hold up until December, and local rate policies to do the same.

We expect Iran's GDP to shrink by 10.8% this year (we forecast a 9.4% contraction three months ago). Oil production and exports, which offer essential revenue and FX inflows, have actually been curtailed by the United States marine blockade, while non-oil activity has been significantly struck. In Iraq, oil exports have actually collapsed to a trickle 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 international economy after more than a decade of civil war. We prepare for GDP development to average 9.6% over 2026-2027, supported by renewed financial investment, especially in banking and energy, financial reforms, and the progressive reopening of regional trade links.

Key Foreign Investment Prospects for the GCC Market

The World Bank has slashed its 2026 growth forecast for Middle East economies, saying overall GDP growth in the area is expected 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 interrupted markets, increased financial volatility, and deteriorated the 2026 growth 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 anticipates that the region's aggregate (omitting the Iran) GDP growth will decelerate 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, reflecting the adverse effects of the continuous dispute.

Saudi Arabia: Forecast was devalued by 1.2 percentage points given that January. Development 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 amongst Gulf economies. United Arab Emirates: Development projection for the UAE has fallen by 2.7 percentage points considering that January.

Qatar: Significantly, growth projection for the Qatari economy has seen a sharp decrease of 11.0 portion points given that January. The economy is now expected to record a contraction of 5.7%, down from an approximated growth of 5.3%, due to extreme blockage to liquefied gas products. Qatar is a crucial player in the international energy market, with an international market share of melted gas (LNG) products varying in between 20% and 21%.

Kuwait relies totally (100%) on the Strait of Hormuz to export its crude oil and derivatives. Subsequently, closing the strait would mean a complete shutdown of the country's financial lifeline, immediately stopping revenue inflows to the state spending plan. Bahrain: Development forecast for Bahrain's economy has declined by 1.8 portion points since January.