Top Foreign Investment Prospects in the GCC Market

Property costs have actually come under pressure after a period of strong development, with current data from the Dubai Land Department showing a drop in mortgage transactions and cash sales. We believe the threat of a long lasting migrant outflow and a severe decline in the real estate sector is low.

As a long lasting US-Iran deal takes shape, the fallout from the conflict has tightened up regional monetary conditions, exposing vulnerabilities through capital outflows, larger bond spreads, and weaker investor belief. The majority of GCC sovereigns bring relatively little financial obligation and financing dangers are for that reason limited in the UAE, the central bank's liquidity management has actually alleviated immediate concerns.

That said, Bahrain has been able 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 very first offering from the area because the war started. High-frequency financial information highlight the pressure on local public financial resources from the conflict.

ANSR July GCC PRs 50DR+

Future Regional Financial Outlook

In Saudi Arabia, the budget deficit more than doubled to SAR125.7 bn, or about 9% of GDP in Q1, driven by a decline in oil income and a rise in costs, especially on aids, reflecting contingency outlays connected to the local environment and a velocity of Vision 2030 spending. In Qatar, the crisis brought oil and gas earnings to a halt, swelling the deficit spending to the biggest considering that 2017.

GCC inflation characteristics stay unequal, with food prices the main source of upward pressure and inflation in this category fortifying in Kuwait, Oman and Qatar. By contrast, food inflation remains fairly subdued in Saudi Arabia, likely reflecting the mitigating result of its bigger domestic food production base and greater supply-chain resilience.

We continue to see price pressures as mostly transitory rather than 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 likely set to resume gradually, we anticipate the US Federal Reserve to keep interest rates on hold until December, and regional rate policies to do the same.

We expect 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 profits and FX inflows, have been curtailed by the United States marine blockade, while non-oil activity has actually been severely hit. In Iraq, oil exports have collapsed to a trickle 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 international economy after more than a decade of civil war. We anticipate GDP growth to typical 9.6% over 2026-2027, supported by restored investment, especially in banking and energy, financial reforms, and the gradual resuming of local trade links.

Positioning Middle East Investments against 2026 Trends

The World Bank has slashed its 2026 growth projection for Middle East economies, saying total 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 strategic Strait of Hormuz, and damage of energy and public infrastructure, had disrupted markets, increased monetary volatility, and compromised the 2026 development 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 anticipates that the area's aggregate (omitting the Iran) GDP development will decelerate to 1.8 percent in 2026, down from 4.0 percent estimated for 2025. The 2026 projection has been devalued by 2.4 portion points since the January projections, reflecting the unfavorable results of the continuous dispute.

Saudi Arabia: Forecast was devalued by 1.2 portion points because January. Growth is now expected to slow from 4.3% in 2025 to 3.1% in 2026, noting that Saudi Arabia's outlook stays the strongest among Gulf economies. United Arab Emirates: Development projection for the UAE has fallen by 2.7 portion points considering that January.

Qatar: Especially, growth projection for the Qatari economy has actually seen a sharp decline of 11.0 percentage points because January. The economy is now anticipated to record a contraction of 5.7%, below an estimated growth of 5.3%, due to extreme blockage to melted gas supplies. Qatar is a crucial gamer in the international energy market, with a global market share of melted gas (LNG) materials 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 indicate a total shutdown of the country's financial lifeline, right away halting profits inflows to the state budget plan. Bahrain: Growth projection for Bahrain's economy has actually decreased by 1.8 percentage points because January.