Global Investment Prospects across the GCC

Home costs have come under pressure after a duration of strong growth, with recent data from the Dubai Land Department revealing a drop in mortgage deals and cash sales. We think the danger of an enduring migrant outflow and a severe recession in the genuine estate sector is low.

As a long lasting US-Iran offer takes shape, the fallout from the dispute has tightened local financial conditions, exposing vulnerabilities through capital outflows, broader bond spreads, and weaker financier sentiment. The majority of GCC sovereigns bring relatively little debt and financing risks are therefore restricted in the UAE, the reserve bank's liquidity management has alleviated instant concerns.

That stated, Bahrain has had the ability to count 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 very first offering from the area given that the war started. High-frequency financial information underscore the stress on regional public finances from the conflict.

ANSR July GCC PRs 50DR+

Strategic Economic Expansion in the Future

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 rise in spending, especially on aids, reflecting contingency investments connected to the local environment and an acceleration of Vision 2030 costs. In Qatar, the crisis brought oil and gas profits to a stop, swelling the budget plan deficit to the largest given that 2017.

GCC inflation characteristics stay irregular, with food prices the primary source of upward pressure and inflation in this classification fortifying in Kuwait, Oman and Qatar. By contrast, food inflation remains relatively suppressed in Saudi Arabia, most likely showing the mitigating result of its larger domestic food production base and greater supply-chain durability.

We continue to see price pressures as largely temporal instead of a sign of a continual inflationary cycle. Appropriately, we expect typical inflation to alleviate to 2.1% y/y in 2027 as short-term supply-side pressures dissipate. With near-term inflation raised and transit through the Strait likely set to resume slowly, we anticipate the US Federal Reserve to keep rates of interest on hold up until December, and local rate policies to follow fit.

We anticipate Iran's GDP to diminish by 10.8% this year (we forecast a 9.4% contraction 3 months ago). Oil production and exports, which provide important revenue and FX inflows, have actually been curtailed by the United States naval blockade, while non-oil activity has actually been severely hit. In Iraq, oil exports have actually collapsed to a drip and we're forecasting 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 prepare for GDP growth to average 9.6% over 2026-2027, supported by restored financial investment, particularly in banking and energy, monetary reforms, and the progressive resuming of local trade links.

Assessing Regional Market Resilience for 2026

The World Bank has slashed its 2026 growth projection for Middle East economies, saying overall GDP development in the area is expected to slow from an approximated 3.6% in January to 1.8% for 2026. The closure of the strategic Strait of Hormuz, and damage of energy and public facilities, had interfered with markets, increased monetary volatility, and weakened 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 area's aggregate (excluding the Iran) GDP development will decrease to 1.8 percent in 2026, below 4.0 percent approximated for 2025. The 2026 forecast has been devalued by 2.4 portion points given that the January forecasts, reflecting the negative impacts of the continuous dispute.

Saudi Arabia: Projection was devalued by 1.2 portion points given that January. Growth is now anticipated to slow from 4.3% in 2025 to 3.1% in 2026, keeping in mind that Saudi Arabia's outlook remains the greatest amongst Gulf economies. United Arab Emirates: Growth forecast for the UAE has actually fallen by 2.7 portion points because January.

Qatar: Notably, development forecast for the Qatari economy has seen a sharp decline of 11.0 percentage points considering that January. The economy is now anticipated to tape a contraction of 5.7%, below an estimated development of 5.3%, due to serious blockage to melted gas products. Qatar is a key gamer in the global energy market, with an international market share of liquefied natural gas (LNG) products varying between 20% and 21%.

Kuwait relies completely (100%) on the Strait of Hormuz to export its unrefined oil and derivatives. Consequently, closing the strait would imply a total shutdown of the nation's monetary lifeline, immediately stopping revenue inflows to the state spending plan. Bahrain: Growth forecast for Bahrain's economy has actually decreased by 1.8 portion points given that January.