Driving Industrial Success via Global Diversification

Home rates have come under pressure after a duration of strong development, with recent information from the Dubai Land Department showing a drop in home loan deals and cash sales. We think the risk of a long lasting migrant outflow and a serious decline in the real estate 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, wider bond spreads, and weaker financier sentiment. Most GCC sovereigns carry relatively little debt and financing risks are therefore limited in the UAE, the central bank's liquidity management has actually minimized instant concerns.

That stated, Bahrain has actually been able to rely 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 because the war began. High-frequency fiscal data highlight the strain on local public finances from the dispute.

ANSR July GCC PRs 50DR+

Global Capital Opportunities across 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 decrease in oil earnings and a surge in costs, particularly on subsidies, showing contingency outlays connected to the local environment and an acceleration of Vision 2030 spending. In Qatar, the crisis brought oil and gas revenue to a halt, swelling the budget deficit to the largest given that 2017.

GCC inflation characteristics stay unequal, with food rates the primary source of upward pressure and inflation in this category fortifying in Kuwait, Oman and Qatar. By contrast, food inflation stays reasonably suppressed in Saudi Arabia, most likely reflecting the mitigating impact of its larger domestic food production base and greater supply-chain strength.

We continue to view price pressures as largely temporal instead of indicative of a sustained inflationary cycle. Accordingly, we anticipate typical 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 gradually, we expect the US Federal Reserve to keep rate of interest on hold till December, and local rate policies to do the same.

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

2026 Business Climate in the GCC

The World Bank has actually slashed its 2026 growth projection for Middle East economies, saying overall GDP development in the area is anticipated to slow from an approximated 3.6% in January to 1.8% for 2026. The closure of the tactical Strait of Hormuz, and destruction of energy and public facilities, had actually interfered with markets, increased financial volatility, and compromised 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 Hardship Outlook forecasts that the region's aggregate (omitting the Iran) GDP development will slow down to 1.8 percent in 2026, down from 4.0 percent estimated for 2025. The 2026 forecast has been downgraded by 2.4 portion points because the January projections, showing the adverse results of the continuous dispute.

Saudi Arabia: Projection was downgraded by 1.2 percentage points considering 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 strongest among Gulf economies. United Arab Emirates: Development forecast for the UAE has actually fallen by 2.7 percentage points because January.

Qatar: Especially, development projection for the Qatari economy has actually seen a sharp decline of 11.0 percentage points considering that January. The economy is now anticipated to tape-record a contraction of 5.7%, down from an estimated growth of 5.3%, due to serious obstruction to melted gas supplies. Qatar is a key player in the global energy market, with a global market share of melted gas (LNG) supplies ranging between 20% and 21%.

Kuwait relies entirely (100%) on the Strait of Hormuz to export its petroleum and derivatives. Closing the strait would mean a complete shutdown of the country's monetary lifeline, instantly stopping profits inflows to the state budget. Bahrain: Development forecast for Bahrain's economy has actually declined by 1.8 portion points considering that January.