Strategic Economic Expansion in the Future

Residential or commercial property costs have come under pressure after a period of strong development, with recent data from the Dubai Land Department revealing a drop in home mortgage transactions and cash sales. We think the threat of a long lasting migrant outflow and an extreme downturn in the genuine estate sector is low.

As a lasting US-Iran offer takes shape, the fallout from the conflict has tightened up regional financial conditions, exposing vulnerabilities through capital outflows, larger bond spreads, and weaker investor sentiment. Most GCC sovereigns carry reasonably little debt and funding threats are therefore restricted in the UAE, the reserve bank's liquidity management has actually eased instant concerns.

That stated, Bahrain has actually had the ability to rely on assistance 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 area since the war started. High-frequency financial data highlight the pressure on regional public financial resources from the conflict.

ANSR July GCC PRs 50DR+

Essential Stock Market Insights for GCC Investors

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 earnings and a rise in costs, especially on subsidies, showing contingency expenses tied to the local environment and a velocity of Vision 2030 costs. In Qatar, the crisis brought oil and gas earnings to a stop, swelling the deficit spending to the biggest because 2017.

GCC inflation characteristics stay uneven, with food prices the main source of upward pressure and inflation in this category strengthening in Kuwait, Oman and Qatar. By contrast, food inflation remains reasonably controlled in Saudi Arabia, most likely reflecting the mitigating effect of its larger domestic food production base and higher supply-chain strength.

We continue to view price pressures as largely temporal instead of a sign of a sustained inflationary cycle. Appropriately, we expect typical inflation to reduce to 2.1% y/y in 2027 as short-lived supply-side pressures dissipate. With near-term inflation raised and transit through the Strait likely set to resume slowly, we anticipate the United States Federal Reserve to keep rates of interest on hold till December, and regional rate policies to follow suit.

We expect Iran's GDP to diminish by 10.8% this year (we anticipate a 9.4% contraction 3 months ago). Oil production and exports, which supply important earnings and FX inflows, have been cut by the US marine blockade, while non-oil activity has been badly struck. In Iraq, oil exports have 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 global economy after more than a years of civil war. We anticipate GDP development to average 9.6% over 2026-2027, supported by restored investment, especially in banking and energy, monetary reforms, and the progressive reopening of local trade links.

International Investment Prospects across the GCC

The World Bank has slashed its 2026 development forecast for Middle East economies, saying general GDP growth in the area is expected to slow from an estimated 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 interfered with markets, increased monetary 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 Poverty Outlook anticipates that the region's aggregate (excluding the Iran) GDP growth will decelerate to 1.8 percent in 2026, below 4.0 percent estimated for 2025. The 2026 projection has been reduced by 2.4 percentage points given that the January projections, showing the unfavorable impacts of the ongoing dispute.

Saudi Arabia: Forecast was reduced by 1.2 percentage points because January. Growth is now expected 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: Development projection for the UAE has fallen by 2.7 percentage points because January.

Qatar: Especially, development forecast for the Qatari economy has actually seen a sharp decline of 11.0 percentage points because January. The economy is now anticipated to tape-record a contraction of 5.7%, down from an approximated development of 5.3%, due to extreme obstruction to liquefied gas supplies. Qatar is a key player in the worldwide energy market, with a global market share of liquefied gas (LNG) products ranging in between 20% and 21%.

Kuwait relies completely (100%) on the Strait of Hormuz to export its crude oil and derivatives. Closing the strait would suggest a total shutdown of the nation's monetary lifeline, right away stopping earnings inflows to the state budget. Bahrain: Growth projection for Bahrain's economy has actually decreased by 1.8 portion points because January.