Global Investment Opportunities across the Middle East

Residential or commercial property rates have come under pressure after a period of strong development, with recent information from the Dubai Land Department revealing a drop in home mortgage transactions and money sales. Nevertheless, we believe the threat of a long lasting migrant outflow and an extreme decline in the realty sector is low.

As a lasting US-Iran offer takes shape, the fallout from the conflict has tightened up local monetary conditions, exposing vulnerabilities through capital outflows, broader bond spreads, and weaker financier belief. The majority of GCC sovereigns bring reasonably little debt and financing threats are therefore restricted in the UAE, the reserve bank's liquidity management has reduced immediate issues.

That stated, Bahrain has actually been able to count on assistance from neighbours, including 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 information highlight the strain on local public finances from the dispute.

ANSR July GCC PRs 50DR+

Key Equity 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 revenue and a surge in costs, particularly on aids, showing contingency expenses connected to the local environment and a velocity of Vision 2030 costs. In Qatar, the crisis brought oil and gas revenue to a stop, swelling the spending plan deficit to the biggest since 2017.

GCC inflation characteristics remain unequal, with food costs the main source of upward pressure and inflation in this classification strengthening in Kuwait, Oman and Qatar. By contrast, food inflation remains reasonably suppressed in Saudi Arabia, likely showing the mitigating effect of its larger domestic food production base and greater supply-chain resilience.

We continue to view cost pressures as largely temporal instead of indicative of a sustained inflationary cycle. Appropriately, 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 US Federal Reserve to keep rate 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 3 months ago). Oil production and exports, which supply vital earnings and FX inflows, have actually been cut by the United States naval blockade, while non-oil activity has actually been severely struck. In Iraq, oil exports have actually collapsed to a drip 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 expect GDP growth to typical 9.6% over 2026-2027, supported by restored financial investment, especially in banking and energy, financial reforms, and the steady reopening of local trade links.

Foreign Investment Prospects within the Middle East

The World Bank has actually slashed its 2026 growth forecast for Middle East economies, saying total GDP development in the area is expected to slow from an estimated 3.6% in January to 1.8% for 2026. The closure of the strategic Strait of Hormuz, and damage of energy and public infrastructure, had disrupted markets, increased monetary volatility, and compromised 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 Hardship Outlook forecasts that the area's aggregate (excluding the Iran) GDP growth will decrease to 1.8 percent in 2026, down from 4.0 percent approximated for 2025. The 2026 forecast has been downgraded by 2.4 percentage points since the January forecasts, showing the negative impacts of the continuous dispute.

Saudi Arabia: Forecast was reduced by 1.2 portion points considering that 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: Growth forecast for the UAE has fallen by 2.7 portion points because January.

Qatar: Especially, growth projection for the Qatari economy has seen a sharp decrease of 11.0 portion points considering that January. The economy is now anticipated to record a contraction of 5.7%, below an estimated growth of 5.3%, due to severe obstruction to melted gas materials. Qatar is a crucial player in the worldwide energy market, with an international market share of liquefied natural gas (LNG) supplies ranging in between 20% and 21%.

Kuwait relies entirely (100%) on the Strait of Hormuz to export its crude oil and derivatives. Closing the strait would imply a complete shutdown of the country's financial lifeline, right away halting revenue inflows to the state budget. Bahrain: Development forecast for Bahrain's economy has declined by 1.8 portion points considering that January.