How Economic Shifts Will Transform GCC Markets

Property rates have actually come under pressure after a period of strong growth, with recent data from the Dubai Land Department showing a drop in home mortgage transactions and cash sales. However, we believe the danger of a lasting migrant outflow and an extreme recession in the genuine 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 investor belief. Most GCC sovereigns bring fairly little debt and financing threats are therefore limited in the UAE, the reserve bank's liquidity management has actually eased immediate issues.

That said, Bahrain has actually had the ability to rely on support 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 area because the war started. High-frequency financial data highlight the stress on regional public finances from the dispute.

ANSR July GCC PRs 50DR+

Essential Capital Diversification in 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 revenue and a rise in costs, especially on subsidies, showing contingency investments connected to the local environment and a velocity of Vision 2030 costs. In Qatar, the crisis brought oil and gas revenue to a halt, swelling the deficit spending to the largest given that 2017.

GCC inflation characteristics stay uneven, with food prices the primary source of upward pressure and inflation in this classification strengthening in Kuwait, Oman and Qatar. By contrast, food inflation remains fairly controlled in Saudi Arabia, most likely showing the mitigating result of its bigger domestic food production base and higher supply-chain resilience.

We continue to see rate pressures as mainly transitory instead of a sign of a sustained inflationary cycle. Appropriately, we expect typical inflation to ease to 2.1% y/y in 2027 as short-lived supply-side pressures dissipate. With near-term inflation raised and transit through the Strait likely set to resume slowly, we expect the US Federal Reserve to keep interest rates on hold until December, and regional rate policies to do the same.

We anticipate Iran's GDP to shrink by 10.8% this year (we anticipate a 9.4% contraction 3 months ago). Oil production and exports, which supply essential profits and FX inflows, have been curtailed by the US naval blockade, while non-oil activity has actually been severely hit. In Iraq, oil exports have collapsed to a drip 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 worldwide economy after more than a decade of civil war. We expect GDP growth to typical 9.6% over 2026-2027, supported by restored financial investment, particularly in banking and energy, financial reforms, and the steady reopening of local trade links.

Key Equity Capital Strategies for GCC Investors

The World Bank has actually slashed its 2026 growth forecast for Middle East economies, stating total 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 strategic Strait of Hormuz, and damage of energy and public infrastructure, had interfered with markets, increased monetary volatility, and compromised 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 Hardship Outlook anticipates that the area's aggregate (omitting the Iran) GDP development will slow down to 1.8 percent in 2026, below 4.0 percent approximated for 2025. The 2026 forecast has actually been downgraded by 2.4 portion points since the January projections, showing the unfavorable impacts of the ongoing dispute.

Saudi Arabia: Projection was downgraded by 1.2 percentage points given that January. Development 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 because January.

Qatar: Notably, growth projection for the Qatari economy has seen a sharp decrease of 11.0 portion points because January. The economy is now expected to tape-record a contraction of 5.7%, below an approximated growth of 5.3%, due to serious blockage to liquefied gas supplies. Qatar is a key gamer in the international energy market, with a worldwide market share of liquefied gas (LNG) materials varying between 20% and 21%.

Kuwait relies totally (100%) on the Strait of Hormuz to export its petroleum and derivatives. Subsequently, closing the strait would imply a total shutdown of the country's monetary lifeline, instantly halting income inflows to the state budget. Bahrain: Growth forecast for Bahrain's economy has declined by 1.8 percentage points given that January.