Optimizing Wealth Strategies for a 2026 Economy

Home costs have come under pressure after a duration of strong growth, with recent data from the Dubai Land Department revealing a drop in home loan deals and money sales. We think the risk of a lasting migrant outflow and an extreme decline in the genuine estate sector is low.

As a lasting US-Iran deal takes shape, the fallout from the conflict has tightened up local financial conditions, exposing vulnerabilities through capital outflows, wider bond spreads, and weaker financier belief. A lot of GCC sovereigns bring relatively little debt and funding threats are for that reason restricted in the UAE, the reserve bank's liquidity management has actually reduced instant concerns.

That said, Bahrain has been able to rely on support 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 considering that the war began. High-frequency financial data highlight the stress on local public finances from the dispute.

ANSR July GCC PRs 50DR+

Driving Non-Oil Growth through Global Diversification

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 costs, particularly on subsidies, reflecting contingency outlays connected to the local environment and a velocity of Vision 2030 costs. In Qatar, the crisis brought oil and gas earnings to a stop, swelling the budget plan deficit to the biggest because 2017.

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

We continue to see price pressures as mainly temporal rather than a sign of a continual inflationary cycle. Accordingly, we expect typical inflation to alleviate 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 expect the United States Federal Reserve to keep rates of interest on hold till December, and regional 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 offer important revenue and FX inflows, have been reduced by the United States marine blockade, while non-oil activity has been severely 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 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, monetary reforms, and the steady resuming of regional trade links.

Why Economic Shifts Will Transform GCC Markets

The World Bank has actually slashed its 2026 growth projection for Middle East economies, saying total GDP growth 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 destruction of energy and public facilities, had interrupted markets, increased financial volatility, and weakened 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 region's aggregate (excluding the Iran) GDP growth will decrease to 1.8 percent in 2026, below 4.0 percent approximated for 2025. The 2026 projection has been devalued by 2.4 percentage points since the January forecasts, reflecting the negative effects of the ongoing dispute.

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

Qatar: Notably, development forecast for the Qatari economy has actually seen a sharp decrease of 11.0 percentage points since January. The economy is now expected to record a contraction of 5.7%, down from an estimated growth of 5.3%, due to severe obstruction to liquefied gas products. Qatar is an essential player in the worldwide energy market, with a worldwide market share of liquefied gas (LNG) products varying between 20% and 21%.

Kuwait relies totally (100%) on the Strait of Hormuz to export its petroleum and derivatives. Closing the strait would mean a complete shutdown of the nation's monetary lifeline, immediately halting earnings inflows to the state budget. Bahrain: Development projection for Bahrain's economy has actually decreased by 1.8 percentage points because January.