Essential Industrial Expansion in 2026

Residential or commercial property costs have come under pressure after a period of strong growth, with current information from the Dubai Land Department showing a drop in home loan transactions and money sales. We think the threat of an enduring migrant outflow and a severe slump in the real estate sector is low.

As a lasting US-Iran deal takes shape, the fallout from the conflict has tightened regional financial conditions, exposing vulnerabilities through capital outflows, broader bond spreads, and weaker investor sentiment. A lot of GCC sovereigns bring relatively little debt and financing risks are therefore limited in the UAE, the main bank's liquidity management has minimized immediate issues.

That said, Bahrain has had the ability to count 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 region considering that the war started. High-frequency fiscal data underscore the strain on local public finances from the conflict.

ANSR July GCC PRs 50DR+

Emerging Equity Trading Patterns for 2026

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 rise in spending, especially on aids, reflecting contingency investments connected to the local environment and an acceleration of Vision 2030 costs. In Qatar, the crisis brought oil and gas earnings to a stop, swelling the deficit spending to the largest because 2017.

GCC inflation dynamics stay unequal, with food prices the primary source of upward pressure and inflation in this classification fortifying in Kuwait, Oman and Qatar. By contrast, food inflation stays fairly suppressed in Saudi Arabia, most likely showing the mitigating effect of its bigger domestic food production base and greater supply-chain strength.

We continue to view rate pressures as mostly transitory instead of indicative of a sustained inflationary cycle. Appropriately, we expect typical inflation to reduce 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 expect the United States Federal Reserve to keep rate of interest on hold up until December, and local rate policies to do the same.

We anticipate Iran's GDP to diminish by 10.8% this year (we forecast a 9.4% contraction 3 months ago). Oil production and exports, which provide essential revenue and FX inflows, have actually been reduced by the US naval blockade, while non-oil activity has actually been significantly hit. In Iraq, oil exports have collapsed to a trickle and we're anticipating GDP to agreement 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 years of civil war. We expect GDP development to average 9.6% over 2026-2027, supported by renewed investment, especially in banking and energy, financial reforms, and the progressive resuming of regional trade links.

Key Foreign Investment Prospects for the GCC Region

The World Bank has actually slashed its 2026 growth forecast for Middle East economies, saying total GDP development in the area is expected to slow from an estimated 3.6% in January to 1.8% for 2026. The closure of the strategic Strait of Hormuz, and destruction of energy and public facilities, had actually disrupted markets, increased monetary volatility, and weakened the 2026 development 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 forecasts that the region's aggregate (omitting the Iran) GDP development will slow down to 1.8 percent in 2026, below 4.0 percent estimated for 2025. The 2026 forecast has been reduced by 2.4 portion points because the January projections, reflecting the negative impacts of the ongoing conflict.

Saudi Arabia: Projection was downgraded by 1.2 percentage points since January. Development is now expected to slow from 4.3% in 2025 to 3.1% in 2026, keeping in mind that Saudi Arabia's outlook stays the strongest amongst Gulf economies. United Arab Emirates: Growth projection for the UAE has actually fallen by 2.7 portion points since January.

Qatar: Notably, growth forecast for the Qatari economy has seen a sharp decrease of 11.0 percentage points because January. The economy is now anticipated to tape-record a contraction of 5.7%, down from an estimated growth of 5.3%, due to severe obstruction to melted gas supplies. Qatar is a key gamer in the global energy market, with an international market share of melted gas (LNG) materials ranging in between 20% and 21%.

Kuwait relies totally (100%) on the Strait of Hormuz to export its petroleum and derivatives. Subsequently, closing the strait would indicate a total shutdown of the nation's monetary lifeline, instantly stopping revenue inflows to the state spending plan. Bahrain: Development forecast for Bahrain's economy has decreased by 1.8 percentage points since January.