Strategic Capital Diversification in the Future

Home prices have come under pressure after a duration of strong development, with current information from the Dubai Land Department revealing a drop in home mortgage transactions and cash sales. Nevertheless, we think the danger of an enduring migrant outflow and an extreme recession in the realty sector is low.

As a lasting US-Iran deal takes shape, the fallout from the dispute has actually tightened local financial conditions, exposing vulnerabilities through capital outflows, broader bond spreads, and weaker financier belief. Most GCC sovereigns bring reasonably little financial obligation and funding threats are therefore restricted in the UAE, the central bank's liquidity management has actually eased instant issues.

That stated, Bahrain has actually been able to depend 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 very first offering from the area considering that the war started. High-frequency financial information highlight the strain on local public financial resources from the dispute.

ANSR July GCC PRs 50DR+

2026 Business Landscape in the GCC

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 rise in spending, especially on subsidies, reflecting contingency investments tied to the regional environment and an acceleration of Vision 2030 costs. In Qatar, the crisis brought oil and gas revenue to a halt, swelling the budget deficit to the biggest considering that 2017.

GCC inflation dynamics stay irregular, with food rates the primary source of upward pressure and inflation in this classification strengthening in Kuwait, Oman and Qatar. By contrast, food inflation remains reasonably controlled in Saudi Arabia, likely showing the mitigating impact of its bigger domestic food production base and greater supply-chain durability.

We continue to view price pressures as mostly transitory instead of a sign of a sustained inflationary cycle. Accordingly, we anticipate typical inflation to relieve to 2.1% y/y in 2027 as temporary supply-side pressures dissipate. With near-term inflation raised and transit through the Strait most likely set to resume slowly, we expect the United States Federal Reserve to keep rate of interest on hold up until December, and regional rate policies to do the same.

We expect Iran's GDP to shrink by 10.8% this year (we forecast a 9.4% contraction 3 months ago). Oil production and exports, which offer vital earnings and FX inflows, have actually been cut by the United States naval blockade, while non-oil activity has been significantly struck. 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 worldwide economy after more than a decade of civil war. We prepare for GDP development to typical 9.6% over 2026-2027, supported by renewed financial investment, especially in banking and energy, financial reforms, and the gradual reopening of local trade links.

2026 Regional Financial Forecasts

The World Bank has actually slashed its 2026 development projection for Middle East economies, stating general GDP growth 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 disrupted markets, increased monetary volatility, and deteriorated 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 Poverty Outlook anticipates that the area's aggregate (leaving out 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 downgraded by 2.4 percentage points considering that the January forecasts, showing the adverse results of the continuous conflict.

Saudi Arabia: Forecast was downgraded by 1.2 portion points considering that January. Development 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 portion points since January.

Qatar: Notably, growth forecast for the Qatari economy has actually seen a sharp decrease of 11.0 portion points considering that January. The economy is now expected to tape-record a contraction of 5.7%, down from an estimated development of 5.3%, due to extreme blockage to liquefied gas products. Qatar is an essential gamer in the worldwide energy market, with a global market share of melted natural gas (LNG) materials ranging between 20% and 21%.

Kuwait relies totally (100%) on the Strait of Hormuz to export its crude oil and derivatives. Consequently, closing the strait would mean a total shutdown of the nation's financial lifeline, immediately stopping earnings inflows to the state budget plan. Bahrain: Development projection for Bahrain's economy has actually decreased by 1.8 percentage points given that January.