Emerging Stock Market Trends for 2026

Property rates have actually come under pressure after a period of strong growth, with recent data from the Dubai Land Department revealing a drop in home loan transactions and money sales. We think the threat of a lasting migrant outflow and an extreme recession in the real estate sector is low.

As a long lasting US-Iran deal takes shape, the fallout from the dispute has tightened regional financial conditions, exposing vulnerabilities through capital outflows, wider bond spreads, and weaker financier sentiment. The majority of GCC sovereigns carry reasonably little financial obligation and financing risks are therefore restricted in the UAE, the reserve bank's liquidity management has relieved immediate issues.

That said, 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 first offering from the region because the war began. High-frequency fiscal data highlight the strain on regional public financial resources from the conflict.

ANSR July GCC PRs 50DR+

Critical Equity Capital Strategies for GCC Growth

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 spending, especially on aids, showing contingency outlays tied to the local environment and a velocity of Vision 2030 spending. In Qatar, the crisis brought oil and gas revenue to a halt, swelling the spending plan deficit to the largest considering that 2017.

GCC inflation dynamics stay unequal, with food prices the primary source of upward pressure and inflation in this category strengthening in Kuwait, Oman and Qatar. By contrast, food inflation remains reasonably subdued in Saudi Arabia, likely reflecting the mitigating impact of its larger domestic food production base and greater supply-chain durability.

We continue to view rate pressures as mainly transitory instead of a sign of a sustained inflationary cycle. Accordingly, we expect 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 gradually, we expect the United States Federal Reserve to keep rates of interest on hold until December, and local rate policies to follow suit.

We expect Iran's GDP to diminish by 10.8% this year (we forecast a 9.4% contraction three months ago). Oil production and exports, which provide necessary earnings and FX inflows, have actually been reduced by the US naval blockade, while non-oil activity has been badly struck. In Iraq, oil exports have actually 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 international economy after more than a years of civil war. We expect GDP growth to typical 9.6% over 2026-2027, supported by restored financial investment, especially in banking and energy, financial reforms, and the progressive reopening of regional trade links.

Optimizing Capital Diversification for a 2026 Economy

The World Bank has actually slashed its 2026 growth forecast for Middle East economies, stating overall 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 actually interrupted markets, increased financial volatility, and deteriorated 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 Poverty Outlook anticipates that the area's aggregate (excluding the Iran) GDP growth will slow down to 1.8 percent in 2026, down from 4.0 percent approximated for 2025. The 2026 projection has been reduced by 2.4 percentage points because the January projections, showing the unfavorable impacts of the ongoing conflict.

Saudi Arabia: Forecast was downgraded by 1.2 percentage points considering that 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 remains the strongest among Gulf economies. United Arab Emirates: Development forecast for the UAE has fallen by 2.7 portion points because January.

Qatar: Notably, development forecast for the Qatari economy has seen a sharp decline of 11.0 portion points since January. The economy is now anticipated to tape-record a contraction of 5.7%, down from an estimated development of 5.3%, due to severe obstruction to liquefied gas products. Qatar is a key player in the global energy market, with an international market share of melted natural gas (LNG) supplies varying between 20% and 21%.

Kuwait relies totally (100%) on the Strait of Hormuz to export its petroleum and derivatives. Consequently, closing the strait would mean a complete shutdown of the country's financial lifeline, right away halting profits inflows to the state spending plan. Bahrain: Development forecast for Bahrain's economy has declined by 1.8 percentage points given that January.