Upcoming GCC Market Outlook

Residential or commercial property prices have come under pressure after a period of strong growth, with current data from the Dubai Land Department revealing a drop in mortgage transactions and cash sales. However, we believe the risk of a lasting migrant outflow and an extreme downturn in the property sector is low.

As an enduring US-Iran deal takes shape, the fallout from the conflict has tightened up local financial conditions, exposing vulnerabilities through capital outflows, larger bond spreads, and weaker financier sentiment. Many GCC sovereigns carry relatively little financial obligation and funding dangers are for that reason limited in the UAE, the central bank's liquidity management has eased immediate issues.

That stated, Bahrain has actually had the ability to count on assistance 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 since the war started. High-frequency financial data underscore the stress on regional public finances from the conflict.

ANSR July GCC PRs 50DR+

Critical Stock Capital Insights 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 decrease in oil income and a surge in spending, especially on aids, showing contingency investments tied to the local environment and a velocity of Vision 2030 costs. In Qatar, the crisis brought oil and gas profits to a halt, swelling the budget plan deficit to the biggest given that 2017.

GCC inflation dynamics stay unequal, with food costs the primary source of upward pressure and inflation in this category strengthening in Kuwait, Oman and Qatar. By contrast, food inflation remains reasonably subdued in Saudi Arabia, most likely showing the mitigating result of its larger domestic food production base and greater supply-chain strength.

We continue to see price pressures as mainly transitory instead of indicative of a sustained inflationary cycle. Accordingly, we expect average inflation to ease to 2.1% y/y in 2027 as temporary 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 rates of interest on hold up until December, and regional rate policies to do the same.

We anticipate Iran's GDP to diminish by 10.8% this year (we anticipate a 9.4% contraction three months ago). Oil production and exports, which provide essential revenue and FX inflows, have been cut by the United States naval blockade, while non-oil activity has actually been seriously struck. In Iraq, oil exports have collapsed to a trickle and we're forecasting 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 expect GDP growth to typical 9.6% over 2026-2027, supported by restored financial investment, particularly in banking and energy, financial reforms, and the progressive resuming of local trade links.

Future-Proofing Regional Investments for 2026 Trends

The World Bank has slashed its 2026 development projection for Middle East economies, saying general GDP development in the area is expected 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 actually interrupted markets, increased monetary volatility, and deteriorated the 2026 development outlook, the World Bank Group said in its Economic Update for the Middle East, North Africa, Afghanistan and Pakistan.

The April 2026 World Bank's Macro Poverty Outlook forecasts that the area's aggregate (excluding the Iran) GDP development will decrease to 1.8 percent in 2026, below 4.0 percent estimated for 2025. The 2026 projection has actually been devalued by 2.4 portion points because the January projections, showing the negative effects of the ongoing dispute.

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

Qatar: Especially, 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%, down from an approximated growth of 5.3%, due to extreme obstruction to liquefied gas products. Qatar is an essential gamer in the worldwide energy market, with a worldwide market share of melted gas (LNG) supplies ranging in between 20% and 21%.

Kuwait relies completely (100%) on the Strait of Hormuz to export its crude oil and derivatives. As a result, closing the strait would suggest a complete shutdown of the nation's financial lifeline, instantly stopping profits inflows to the state spending plan. Bahrain: Growth forecast for Bahrain's economy has declined by 1.8 portion points because January.