The Future Investment Landscape in the GCC

Residential or commercial property prices have come under pressure after a duration of strong growth, with current information from the Dubai Land Department showing a drop in home mortgage deals and cash sales. Nonetheless, we believe the danger of a long lasting migrant outflow and a severe slump in the property sector is low.

As a lasting US-Iran offer takes shape, the fallout from the conflict has actually tightened up regional financial conditions, exposing vulnerabilities through capital outflows, wider bond spreads, and weaker financier belief. The majority of GCC sovereigns carry reasonably little debt and funding risks are therefore restricted in the UAE, the reserve bank's liquidity management has actually minimized immediate concerns.

That stated, Bahrain has been able to count 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 first offering from the area considering that the war started. High-frequency financial data underscore the pressure on regional public financial resources from the dispute.

ANSR July GCC PRs 50DR+

Key Stock Capital Strategies for Regional Growth

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 revenue and a rise in costs, particularly on aids, showing contingency expenses connected to the local environment and an acceleration of Vision 2030 spending. In Qatar, the crisis brought oil and gas earnings to a halt, swelling the deficit spending to the biggest considering that 2017.

GCC inflation dynamics remain uneven, with food prices the main source of upward pressure and inflation in this category fortifying in Kuwait, Oman and Qatar. By contrast, food inflation remains fairly suppressed in Saudi Arabia, most likely showing the mitigating impact of its larger domestic food production base and greater supply-chain strength.

We continue to see price pressures as largely transitory instead of indicative of a sustained inflationary cycle. Appropriately, we anticipate typical inflation to ease to 2.1% y/y in 2027 as momentary supply-side pressures dissipate. With near-term inflation elevated and transit through the Strait most likely set to resume slowly, we expect 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 diminish by 10.8% this year (we forecast a 9.4% contraction 3 months ago). Oil production and exports, which supply important income and FX inflows, have been reduced by the US marine blockade, while non-oil activity has been significantly hit. In Iraq, oil exports have actually 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 expect GDP growth to average 9.6% over 2026-2027, supported by renewed financial investment, especially in banking and energy, monetary reforms, and the gradual resuming of local trade links.

Navigating Capital Strategies for a 2026 Economy

The World Bank has actually slashed its 2026 development 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 tactical Strait of Hormuz, and damage of energy and public facilities, 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 (leaving out the Iran) GDP growth will decrease to 1.8 percent in 2026, down from 4.0 percent estimated for 2025. The 2026 projection has been devalued by 2.4 portion points considering that the January forecasts, reflecting the unfavorable impacts of the continuous conflict.

Saudi Arabia: Projection was devalued by 1.2 portion 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 greatest among Gulf economies. United Arab Emirates: Growth forecast for the UAE has fallen by 2.7 percentage points given that January.

Qatar: Significantly, growth projection for the Qatari economy has actually seen a sharp decline of 11.0 percentage points since January. The economy is now expected to tape-record a contraction of 5.7%, down from an approximated growth of 5.3%, due to severe blockage to melted gas materials. Qatar is a key gamer in the global energy market, with an international market share of melted natural gas (LNG) products varying between 20% and 21%.

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