Future Regional Financial Forecasts

Property costs have actually come under pressure after a duration of strong development, with recent information from the Dubai Land Department revealing a drop in mortgage deals and cash sales. We think the threat of an enduring migrant outflow and a severe slump in the real estate sector is low.

As an enduring US-Iran deal takes shape, the fallout from the dispute has tightened up local monetary conditions, exposing vulnerabilities through capital outflows, larger bond spreads, and weaker financier belief. Most GCC sovereigns carry reasonably little financial obligation and financing dangers are therefore limited in the UAE, the central bank's liquidity management has reduced instant 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 because the war began. High-frequency fiscal information highlight the strain on local public finances from the conflict.

ANSR July GCC PRs 50DR+

Top International Investment Avenues in the GCC Market

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 profits and a rise in spending, especially on aids, showing contingency expenses tied to the local environment and an acceleration of Vision 2030 costs. In Qatar, the crisis brought oil and gas revenue to a halt, swelling the deficit spending to the largest since 2017.

GCC inflation dynamics remain uneven, with food rates the primary source of upward pressure and inflation in this category strengthening in Kuwait, Oman and Qatar. By contrast, food inflation stays relatively suppressed in Saudi Arabia, most likely reflecting the mitigating result of its bigger domestic food production base and higher supply-chain durability.

We continue to view rate pressures as mainly transitory rather than a sign of a continual inflationary cycle. Accordingly, we anticipate 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 likely set to resume gradually, we expect the US Federal Reserve to keep interest rates on hold till December, and local rate policies to do the same.

We expect Iran's GDP to diminish by 10.8% this year (we forecast a 9.4% contraction 3 months ago). Oil production and exports, which offer vital profits and FX inflows, have actually been curtailed by the United States naval blockade, while non-oil activity has been badly struck. 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 worldwide economy after more than a decade of civil war. We anticipate GDP growth to average 9.6% over 2026-2027, supported by restored financial investment, especially in banking and energy, financial reforms, and the progressive reopening of local trade links.

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The World Bank has actually slashed its 2026 development forecast for Middle East economies, saying overall GDP development in the region is expected 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 disrupted markets, increased financial volatility, and damaged 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 Poverty Outlook anticipates that the area's aggregate (omitting the Iran) GDP development will slow down to 1.8 percent in 2026, down from 4.0 percent approximated for 2025. The 2026 forecast has been downgraded by 2.4 percentage points considering that the January projections, showing the unfavorable effects of the ongoing dispute.

Saudi Arabia: Projection was reduced by 1.2 percentage points considering that 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 greatest amongst Gulf economies. United Arab Emirates: Growth forecast for the UAE has fallen by 2.7 portion points since January.

Qatar: Notably, development projection for the Qatari economy has actually seen a sharp decline of 11.0 portion points considering that January. The economy is now expected to tape-record a contraction of 5.7%, below an approximated development of 5.3%, due to serious blockage to melted gas materials. Qatar is a key gamer in the global energy market, with an international 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. Subsequently, closing the strait would imply a total shutdown of the nation's financial lifeline, immediately stopping income inflows to the state spending plan. Bahrain: Development forecast for Bahrain's economy has decreased by 1.8 percentage points because January.