Key Foreign Capital Avenues in the GCC Region

Property rates have come under pressure after a duration of strong development, with current information from the Dubai Land Department showing a drop in home loan transactions and money sales. We believe the danger of a lasting migrant outflow and an extreme recession in the genuine estate sector is low.

As a long lasting US-Iran offer takes shape, the fallout from the dispute has actually tightened up local monetary conditions, exposing vulnerabilities through capital outflows, larger bond spreads, and weaker financier belief. Many GCC sovereigns bring relatively little debt and funding risks are for that reason restricted in the UAE, the main bank's liquidity management has actually minimized immediate issues.

That said, Bahrain has actually had the ability to count 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 first offering from the region because the war started. High-frequency financial information underscore the strain on regional public finances from the conflict.

ANSR July GCC PRs 50DR+

Future Business Landscape of Arabia

In Saudi Arabia, the budget plan deficit more than doubled to SAR125.7 bn, or about 9% of GDP in Q1, driven by a decrease in oil profits and a rise in costs, especially on aids, reflecting contingency investments tied to the regional environment and a velocity of Vision 2030 costs. In Qatar, the crisis brought oil and gas profits to a halt, swelling the budget plan deficit to the biggest given that 2017.

GCC inflation dynamics remain irregular, with food prices the main source of upward pressure and inflation in this classification strengthening in Kuwait, Oman and Qatar. By contrast, food inflation remains relatively subdued in Saudi Arabia, most likely reflecting the mitigating result of its larger domestic food production base and greater supply-chain durability.

We continue to view rate pressures as mostly transitory instead of indicative of a sustained inflationary cycle. Accordingly, we anticipate typical inflation to alleviate to 2.1% y/y in 2027 as momentary supply-side pressures dissipate. With near-term inflation elevated and transit through the Strait most likely set to resume gradually, we anticipate the United States Federal Reserve to keep interest rates on hold 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 3 months ago). Oil production and exports, which provide important profits and FX inflows, have been curtailed by the US naval blockade, while non-oil activity has actually been severely struck. 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 years of civil war. We expect GDP growth to average 9.6% over 2026-2027, supported by restored financial investment, especially in banking and energy, financial reforms, and the progressive resuming of regional trade links.

Evaluating Regional Investment Potential in 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 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 damaged 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 (excluding the Iran) GDP growth will decelerate to 1.8 percent in 2026, below 4.0 percent approximated for 2025. The 2026 projection has been reduced by 2.4 portion points because the January forecasts, showing the adverse effects of the continuous dispute.

Saudi Arabia: Projection was reduced by 1.2 portion points given that January. Growth is now anticipated to slow from 4.3% in 2025 to 3.1% in 2026, noting 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 portion points since January.

Qatar: Especially, growth projection for the Qatari economy has actually seen a sharp decline of 11.0 portion points since January. The economy is now anticipated to tape a contraction of 5.7%, down from an approximated growth of 5.3%, due to severe blockage to melted gas materials. Qatar is a crucial player in the global energy market, with an international market share of liquefied gas (LNG) materials varying in between 20% and 21%.

Kuwait relies completely (100%) on the Strait of Hormuz to export its unrefined oil and derivatives. Closing the strait would suggest a complete shutdown of the country's financial lifeline, right away halting revenue inflows to the state budget. Bahrain: Growth projection for Bahrain's economy has actually decreased by 1.8 percentage points considering that January.