Global Investment Prospects across the GCC

Property costs have come under pressure after a period of strong growth, with current information from the Dubai Land Department showing a drop in mortgage transactions and money sales. However, we think the danger of a long lasting migrant outflow and an extreme slump in the realty sector is low.

As a lasting US-Iran offer takes shape, the fallout from the dispute has tightened regional monetary conditions, exposing vulnerabilities through capital outflows, larger bond spreads, and weaker investor belief. A lot of GCC sovereigns bring reasonably little debt and financing risks are for that reason restricted in the UAE, the central bank's liquidity management has actually reduced instant issues.

That stated, Bahrain has had the ability to rely 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 first offering from the area considering that the war began. High-frequency fiscal data underscore the stress on regional public financial resources from the dispute.

ANSR July GCC PRs 50DR+

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In Saudi Arabia, the deficit spending more than doubled to SAR125.7 bn, or about 9% of GDP in Q1, driven by a decline in oil profits and a surge in costs, particularly on aids, reflecting contingency expenses tied to the local environment and a velocity of Vision 2030 spending. In Qatar, the crisis brought oil and gas income to a stop, swelling the budget plan deficit to the largest because 2017.

GCC inflation characteristics remain unequal, with food costs the main source of upward pressure and inflation in this classification fortifying in Kuwait, Oman and Qatar. By contrast, food inflation stays reasonably subdued in Saudi Arabia, most likely showing the mitigating result of its bigger domestic food production base and greater supply-chain resilience.

We continue to see price pressures as largely transitory instead of indicative of a continual inflationary cycle. Appropriately, we anticipate average inflation to relieve to 2.1% y/y in 2027 as momentary supply-side pressures dissipate. With near-term inflation raised and transit through the Strait likely set to resume gradually, we anticipate the US Federal Reserve to keep rate of interest on hold up until December, and regional rate policies to do the same.

We anticipate Iran's GDP to shrink by 10.8% this year (we anticipate a 9.4% contraction three months ago). Oil production and exports, which offer essential earnings and FX inflows, have been curtailed by the US marine blockade, while non-oil activity has been seriously hit. 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 prepare for GDP growth to typical 9.6% over 2026-2027, supported by renewed investment, particularly in banking and energy, financial reforms, and the gradual resuming of regional trade links.

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The World Bank has slashed its 2026 growth projection for Middle East economies, saying overall GDP growth in the area 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 infrastructure, had actually interrupted markets, increased financial volatility, and weakened 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 region's aggregate (leaving out the Iran) GDP development will slow down to 1.8 percent in 2026, below 4.0 percent estimated for 2025. The 2026 projection has been downgraded by 2.4 percentage points given that the January projections, showing the unfavorable effects of the continuous conflict.

Saudi Arabia: Projection was reduced by 1.2 portion points since January. Growth is now anticipated to slow from 4.3% in 2025 to 3.1% in 2026, noting that Saudi Arabia's outlook remains the strongest among Gulf economies. United Arab Emirates: Development forecast for the UAE has actually fallen by 2.7 portion points since January.

Qatar: Especially, development forecast for the Qatari economy has seen a sharp decrease of 11.0 portion points because January. The economy is now anticipated to tape-record a contraction of 5.7%, below an approximated development of 5.3%, due to extreme blockage to melted gas supplies. Qatar is a crucial player in the global energy market, with an international market share of liquefied natural gas (LNG) materials varying between 20% and 21%.

Kuwait relies totally (100%) on the Strait of Hormuz to export its petroleum and derivatives. Subsequently, closing the strait would mean a complete shutdown of the nation's financial lifeline, right away stopping earnings inflows to the state spending plan. Bahrain: Development projection for Bahrain's economy has actually decreased by 1.8 portion points given that January.