Global Investment Prospects across the Middle East

Residential or commercial property costs have come under pressure after a duration of strong development, with recent information from the Dubai Land Department showing a drop in mortgage deals and money sales. We think the threat of a lasting migrant outflow and an extreme slump in the real estate sector is low.

As an enduring US-Iran offer takes shape, the fallout from the conflict has tightened up regional financial conditions, exposing vulnerabilities through capital outflows, wider bond spreads, and weaker investor sentiment. A lot of GCC sovereigns carry fairly little debt and funding threats are therefore restricted in the UAE, the main bank's liquidity management has actually eased immediate issues.

That stated, Bahrain has actually had the ability to rely on assistance 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 financial data underscore the pressure on local public finances from the dispute.

ANSR July GCC PRs 50DR+

International Investment Prospects across the Middle East

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 spending, especially on subsidies, showing contingency expenses connected to the local environment and an acceleration of Vision 2030 costs. In Qatar, the crisis brought oil and gas revenue to a stop, swelling the deficit spending to the biggest considering that 2017.

GCC inflation dynamics stay uneven, with food prices the primary source of upward pressure and inflation in this classification fortifying in Kuwait, Oman and Qatar. By contrast, food inflation remains relatively suppressed in Saudi Arabia, likely reflecting the mitigating result of its larger domestic food production base and greater supply-chain durability.

We continue to see rate pressures as mainly temporal instead of a sign of a continual inflationary cycle. Accordingly, we anticipate average inflation to alleviate 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 gradually, we expect the US Federal Reserve to keep rate of interest on hold up until December, and regional rate policies to follow suit.

We expect Iran's GDP to diminish 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 reduced by the US naval blockade, while non-oil activity has been significantly struck. In Iraq, oil exports have 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 international economy after more than a years of civil war. We anticipate GDP growth to typical 9.6% over 2026-2027, supported by renewed financial investment, particularly in banking and energy, monetary reforms, and the progressive reopening of regional trade links.

GCC Stock Market Trends for 2026

The World Bank has slashed its 2026 development forecast for Middle East economies, saying total GDP growth in the region 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 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 Poverty Outlook forecasts that the area's aggregate (leaving out the Iran) GDP development will decrease to 1.8 percent in 2026, below 4.0 percent estimated for 2025. The 2026 forecast has actually been reduced by 2.4 portion points because the January projections, reflecting the unfavorable results of the continuous conflict.

Saudi Arabia: Forecast was reduced by 1.2 portion points because January. Growth is now expected to slow from 4.3% in 2025 to 3.1% in 2026, noting that Saudi Arabia's outlook remains the greatest amongst Gulf economies. United Arab Emirates: Development forecast for the UAE has fallen by 2.7 portion points given that January.

Qatar: Especially, development forecast 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%, below an approximated development of 5.3%, due to extreme blockage to melted gas materials. Qatar is a crucial player in the worldwide energy market, with a global market share of melted natural gas (LNG) products varying in between 20% and 21%.

Kuwait relies completely (100%) on the Strait of Hormuz to export its unrefined oil and derivatives. Consequently, closing the strait would suggest a total shutdown of the country's financial lifeline, right away stopping revenue inflows to the state spending plan. Bahrain: Development forecast for Bahrain's economy has actually declined by 1.8 percentage points since January.