Upcoming GCC Market Outlook

Home rates have come under pressure after a duration of strong development, with recent data from the Dubai Land Department revealing a drop in mortgage deals and cash sales. Nonetheless, we think the risk of a lasting migrant outflow and a severe recession in the realty sector is low.

As a lasting US-Iran deal takes shape, the fallout from the dispute has actually tightened up regional monetary conditions, exposing vulnerabilities through capital outflows, wider bond spreads, and weaker investor sentiment. A lot of GCC sovereigns carry reasonably little debt and financing dangers are for that reason limited in the UAE, the reserve bank's liquidity management has alleviated instant concerns.

That stated, Bahrain has been able to count on support from neighbours, consisting of 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 region because the war started. High-frequency financial data highlight the strain on regional public finances from the conflict.

ANSR July GCC PRs 50DR+

Securing Middle East Portfolios against 2026 Shifts

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 costs, especially on subsidies, reflecting contingency outlays tied to the regional environment and a velocity of Vision 2030 costs. In Qatar, the crisis brought oil and gas earnings to a stop, swelling the budget plan deficit to the largest because 2017.

GCC inflation characteristics remain irregular, with food prices the primary source of upward pressure and inflation in this category conditioning in Kuwait, Oman and Qatar. By contrast, food inflation stays reasonably subdued in Saudi Arabia, likely reflecting the mitigating effect of its larger domestic food production base and greater supply-chain durability.

We continue to view price pressures as largely temporal instead of indicative of a sustained inflationary cycle. Appropriately, we anticipate average inflation to reduce 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 slowly, we anticipate the US Federal Reserve to keep rates of interest on hold till December, and local rate policies to follow suit.

We anticipate 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 vital income and FX inflows, have been cut by the US naval blockade, while non-oil activity has actually been badly struck. In Iraq, oil exports have collapsed to a drip and we're anticipating 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 global economy after more than a years of civil war. We expect GDP growth to average 9.6% over 2026-2027, supported by restored investment, especially in banking and energy, monetary reforms, and the progressive reopening of regional trade links.

Global Capital Prospects across the GCC

The World Bank has slashed its 2026 development forecast for Middle East economies, saying total GDP development in the region is anticipated to slow from an approximated 3.6% in January to 1.8% for 2026. The closure of the strategic Strait of Hormuz, and destruction of energy and public facilities, had interrupted markets, increased monetary 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 Poverty Outlook forecasts that the area's aggregate (omitting the Iran) GDP development will slow down to 1.8 percent in 2026, down from 4.0 percent approximated for 2025. The 2026 forecast has actually been reduced by 2.4 percentage points because the January projections, showing the negative effects of the continuous dispute.

Saudi Arabia: Forecast was devalued by 1.2 percentage points considering that January. Development is now anticipated to slow from 4.3% in 2025 to 3.1% in 2026, noting that Saudi Arabia's outlook stays the greatest among Gulf economies. United Arab Emirates: Development forecast for the UAE has actually fallen by 2.7 percentage points considering that January.

Qatar: Significantly, growth forecast for the Qatari economy has seen a sharp decline of 11.0 portion points because January. The economy is now anticipated to tape-record a contraction of 5.7%, below an estimated growth of 5.3%, due to severe blockage to melted gas supplies. Qatar is a key player in the worldwide energy market, with an international market share of liquefied gas (LNG) supplies ranging 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 mean a complete shutdown of the nation's financial lifeline, right away halting income inflows to the state budget plan. Bahrain: Growth projection for Bahrain's economy has declined by 1.8 portion points because January.