Securing Regional Investments for 2026 Shifts

Property costs have actually come under pressure after a period of strong development, with recent information from the Dubai Land Department revealing a drop in home loan deals and cash sales. Nonetheless, we think the threat of a lasting migrant outflow and a serious recession in the real estate sector is low.

As a long lasting US-Iran deal takes shape, the fallout from the dispute has tightened regional financial conditions, exposing vulnerabilities through capital outflows, wider bond spreads, and weaker financier sentiment. Most GCC sovereigns bring fairly little debt and financing threats are therefore restricted in the UAE, the main bank's liquidity management has eased instant issues.

That said, Bahrain has actually had the ability to depend on support from neighbours, consisting of 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 considering that the war began. High-frequency financial data highlight the pressure on regional public finances from the dispute.

ANSR July GCC PRs 50DR+

Key Foreign Investment Prospects for the GCC Region

In Saudi Arabia, the budget deficit 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, especially on aids, showing contingency outlays tied to the regional environment and a velocity of Vision 2030 spending. In Qatar, the crisis brought oil and gas earnings to a halt, swelling the deficit spending to the largest given that 2017.

GCC inflation characteristics remain unequal, with food rates the primary source of upward pressure and inflation in this category fortifying in Kuwait, Oman and Qatar. By contrast, food inflation remains relatively subdued in Saudi Arabia, likely showing the mitigating result of its bigger domestic food production base and higher supply-chain resilience.

We continue to see rate pressures as mostly temporal instead of indicative of a sustained inflationary cycle. Appropriately, we anticipate average inflation to alleviate to 2.1% y/y in 2027 as momentary supply-side pressures dissipate. With near-term inflation elevated and transit through the Strait likely set to resume gradually, we anticipate the United States Federal Reserve to keep rate of interest 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 anticipate a 9.4% contraction three months ago). Oil production and exports, which offer essential income and FX inflows, have actually been cut by the US marine blockade, while non-oil activity has been significantly struck. 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 international economy after more than a decade of civil war. We anticipate GDP development to typical 9.6% over 2026-2027, supported by renewed investment, especially in banking and energy, financial reforms, and the progressive reopening of regional trade links.

Essential Economic Diversification in the Future

The World Bank has actually slashed its 2026 development projection for Middle East economies, saying total GDP development in the region is expected to slow from an estimated 3.6% in January to 1.8% for 2026. The closure of the tactical Strait of Hormuz, and destruction of energy and public infrastructure, had interfered with markets, increased monetary volatility, and damaged 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 (excluding the Iran) GDP growth 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 considering that the January forecasts, showing the negative effects of the continuous conflict.

Saudi Arabia: Forecast was devalued by 1.2 percentage points since January. Growth is now anticipated to slow from 4.3% in 2025 to 3.1% in 2026, noting that Saudi Arabia's outlook stays the greatest among Gulf economies. United Arab Emirates: Development forecast for the UAE has actually fallen by 2.7 portion points given that January.

Qatar: Notably, development projection for the Qatari economy has actually seen a sharp decline of 11.0 percentage points since January. The economy is now anticipated to record a contraction of 5.7%, below an estimated growth of 5.3%, due to extreme blockage to liquefied gas supplies. Qatar is a crucial player in the worldwide energy market, with an international market share of melted natural gas (LNG) supplies ranging in between 20% and 21%.

Kuwait relies completely (100%) on the Strait of Hormuz to export its unrefined oil and derivatives. Consequently, closing the strait would imply a complete shutdown of the country's monetary lifeline, right away halting profits inflows to the state budget. Bahrain: Growth forecast for Bahrain's economy has actually decreased by 1.8 portion points because January.