Key Stock Market Strategies for Regional Investors

Property rates have actually come under pressure after a duration of strong development, with current data from the Dubai Land Department showing a drop in home loan transactions and money sales. Nonetheless, we think the threat of a long lasting migrant outflow and a serious downturn in the realty sector is low.

As a lasting US-Iran offer takes shape, the fallout from the conflict has tightened local financial conditions, exposing vulnerabilities through capital outflows, broader bond spreads, and weaker investor belief. Many GCC sovereigns bring reasonably little financial obligation and funding risks are therefore restricted in the UAE, the main bank's liquidity management has actually minimized immediate concerns.

That said, Bahrain has actually had the ability to depend on support 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 considering that the war began. High-frequency financial data underscore the stress on regional public finances from the dispute.

ANSR July GCC PRs 50DR+

Accelerating Non-Oil Success through Global Diversification

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 earnings and a surge in costs, particularly on aids, showing contingency expenses tied to the local environment and an acceleration of Vision 2030 spending. In Qatar, the crisis brought oil and gas revenue to a stop, swelling the budget plan deficit to the largest because 2017.

GCC inflation dynamics remain uneven, 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, likely reflecting the mitigating effect of its larger domestic food production base and higher supply-chain durability.

We continue to view cost pressures as largely temporal instead of indicative of a sustained inflationary cycle. Appropriately, we anticipate average inflation to relieve to 2.1% y/y in 2027 as short-term supply-side pressures dissipate. With near-term inflation raised and transit through the Strait most likely set to resume slowly, we anticipate the United States Federal Reserve to keep rates of interest on hold until December, and local rate policies to do the same.

We anticipate Iran's GDP to shrink by 10.8% this year (we anticipate a 9.4% contraction 3 months ago). Oil production and exports, which offer vital profits and FX inflows, have been cut by the United States marine blockade, while non-oil activity has been severely struck. In Iraq, oil exports have actually 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 worldwide economy after more than a decade of civil war. We prepare for GDP development to average 9.6% over 2026-2027, supported by restored financial investment, especially in banking and energy, monetary reforms, and the progressive reopening of regional trade links.

Advancing Non-Oil Growth via Strategic Diversification

The World Bank has actually slashed its 2026 growth forecast for Middle East economies, saying general GDP growth in the area is anticipated to slow from an estimated 3.6% in January to 1.8% for 2026. The closure of the tactical Strait of Hormuz, and damage of energy and public infrastructure, had actually disrupted markets, increased monetary 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 Hardship Outlook anticipates that the region's aggregate (omitting the Iran) GDP growth will decrease to 1.8 percent in 2026, down from 4.0 percent estimated for 2025. The 2026 projection has been reduced by 2.4 portion points since the January forecasts, reflecting the adverse results of the continuous conflict.

Saudi Arabia: Projection was downgraded by 1.2 portion points given that January. Growth 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: Growth projection for the UAE has fallen by 2.7 percentage points because January.

Qatar: Significantly, growth forecast for the Qatari economy has actually seen a sharp decline of 11.0 portion points given that January. The economy is now expected to tape a contraction of 5.7%, below an estimated growth of 5.3%, due to severe blockage to liquefied gas supplies. Qatar is an essential gamer in the international energy market, with a global market share of liquefied natural gas (LNG) materials ranging between 20% and 21%.

Kuwait relies entirely (100%) on the Strait of Hormuz to export its crude oil and derivatives. Closing the strait would mean a total shutdown of the country's monetary lifeline, instantly stopping income inflows to the state budget. Bahrain: Growth forecast for Bahrain's economy has actually declined by 1.8 percentage points given that January.