Future Business Landscape of the GCC

Residential or commercial property costs have come under pressure after a period of strong growth, with recent information from the Dubai Land Department showing a drop in home mortgage transactions and cash sales. We believe the threat of a lasting migrant outflow and an extreme downturn in the real estate sector is low.

As an enduring US-Iran offer takes shape, the fallout from the dispute has actually tightened regional financial conditions, exposing vulnerabilities through capital outflows, wider bond spreads, and weaker investor belief. Many GCC sovereigns bring reasonably little financial obligation and financing risks are therefore restricted in the UAE, the reserve bank's liquidity management has reduced immediate issues.

That said, Bahrain has been able to rely on support from neighbours, including 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 region given that the war started. High-frequency fiscal information highlight the strain on regional public finances from the conflict.

ANSR July GCC PRs 50DR+

Key Equity Capital Strategies for GCC Investors

In Saudi Arabia, the budget 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 costs, especially on subsidies, reflecting contingency investments connected to the local environment and an acceleration of Vision 2030 spending. In Qatar, the crisis brought oil and gas income to a halt, swelling the deficit spending to the biggest considering that 2017.

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

We continue to see cost pressures as largely temporal instead of indicative of a sustained inflationary cycle. Accordingly, we expect typical inflation to ease to 2.1% y/y in 2027 as temporary supply-side pressures dissipate. With near-term inflation elevated and transit through the Strait likely set to resume gradually, we anticipate the United States Federal Reserve to keep interest rates on hold till December, and regional rate policies to do the same.

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 provide vital earnings and FX inflows, have actually been cut by the US marine blockade, while non-oil activity has actually been severely struck. In Iraq, oil exports have collapsed to a drip 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 worldwide economy after more than a years of civil war. We expect GDP development to average 9.6% over 2026-2027, supported by renewed financial investment, particularly in banking and energy, financial reforms, and the gradual reopening of local trade links.

Strategic Economic Expansion in 2026

The World Bank has actually slashed its 2026 growth projection for Middle East economies, stating overall 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 damage of energy and public facilities, had disrupted markets, increased monetary volatility, and damaged the 2026 growth 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 (omitting the Iran) GDP growth will slow down to 1.8 percent in 2026, below 4.0 percent estimated for 2025. The 2026 projection has been downgraded by 2.4 portion points given that the January projections, reflecting the adverse results of the ongoing conflict.

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 remains the greatest amongst Gulf economies. United Arab Emirates: Development projection for the UAE has actually fallen by 2.7 portion points because January.

Qatar: Especially, growth projection for the Qatari economy has actually seen a sharp decline 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 severe blockage to liquefied gas materials. Qatar is a key player in the global energy market, with an international market share of liquefied natural gas (LNG) materials varying in between 20% and 21%.

Kuwait relies entirely (100%) on the Strait of Hormuz to export its petroleum and derivatives. Consequently, closing the strait would suggest a total shutdown of the country's financial lifeline, instantly stopping profits inflows to the state budget. Bahrain: Growth projection for Bahrain's economy has declined by 1.8 percentage points since January.