Navigating Investment Strategies in a Global Economy

Residential or commercial property rates have come under pressure after a period of strong growth, with recent information from the Dubai Land Department revealing a drop in home loan transactions and money sales. We believe the danger of a lasting migrant outflow and a severe decline in the real estate sector is low.

As a lasting US-Iran offer takes shape, the fallout from the dispute has tightened up regional monetary conditions, exposing vulnerabilities through capital outflows, broader bond spreads, and weaker financier belief. Most GCC sovereigns bring fairly little financial obligation and funding risks are therefore limited in the UAE, the main bank's liquidity management has reduced immediate issues.

That stated, Bahrain has been able to depend on assistance from neighbours, consisting of 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 given that the war began. High-frequency fiscal information highlight the stress on regional public financial resources from the dispute.

ANSR July GCC PRs 50DR+

Key Industrial Shifts 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 decline in oil profits and a rise in spending, especially on subsidies, showing contingency outlays connected to the regional environment and a velocity of Vision 2030 spending. In Qatar, the crisis brought oil and gas earnings to a stop, swelling the deficit spending to the largest since 2017.

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

We continue to view cost pressures as mainly transitory instead of a sign of a sustained inflationary cycle. Appropriately, we anticipate typical inflation to relieve to 2.1% y/y in 2027 as temporary supply-side pressures dissipate. With near-term inflation elevated and transit through the Strait most likely set to resume gradually, we anticipate the US Federal Reserve to keep interest rates on hold till December, and regional rate policies to do the same.

We expect Iran's GDP to shrink by 10.8% this year (we forecast a 9.4% contraction 3 months ago). Oil production and exports, which provide necessary revenue and FX inflows, have been reduced by the United States marine blockade, while non-oil activity has actually been seriously struck. In Iraq, oil exports have actually collapsed to a drip and we're anticipating 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 expect GDP growth to average 9.6% over 2026-2027, supported by renewed financial investment, especially in banking and energy, financial reforms, and the gradual resuming of local trade links.

Mastering Investment Diversification in a 2026 Economy

The World Bank has slashed its 2026 growth forecast for Middle East economies, stating overall GDP development 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 destruction of energy and public facilities, had disrupted markets, increased monetary volatility, and deteriorated 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 Hardship Outlook forecasts that the region's aggregate (omitting the Iran) GDP growth will slow down to 1.8 percent in 2026, below 4.0 percent estimated for 2025. The 2026 projection has actually been reduced by 2.4 portion points considering that the January projections, showing the adverse effects of the continuous dispute.

Saudi Arabia: Forecast was downgraded by 1.2 percentage points given that January. Growth 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: Development forecast for the UAE has fallen by 2.7 percentage points given that January.

Qatar: Significantly, development forecast for the Qatari economy has seen a sharp decline of 11.0 portion points given that January. The economy is now anticipated to tape-record a contraction of 5.7%, below an approximated development of 5.3%, due to serious blockage to liquefied gas materials. Qatar is an essential player in the worldwide energy market, with a global market share of melted gas (LNG) supplies varying in between 20% and 21%.

Kuwait relies totally (100%) on the Strait of Hormuz to export its crude oil and derivatives. As a result, closing the strait would imply a complete shutdown of the nation's monetary lifeline, right away stopping income inflows to the state spending plan. Bahrain: Development projection for Bahrain's economy has declined by 1.8 portion points given that January.