2026 Investment Landscape of the GCC

Home costs have actually come under pressure after a duration of strong development, with current data from the Dubai Land Department showing a drop in mortgage transactions and money sales. Nonetheless, we believe the risk of a long lasting migrant outflow and an extreme decline in the property sector is low.

As a lasting US-Iran deal takes shape, the fallout from the dispute has tightened regional monetary conditions, exposing vulnerabilities through capital outflows, wider bond spreads, and weaker investor sentiment. Most GCC sovereigns bring relatively little debt and financing dangers are for that reason limited in the UAE, the central bank's liquidity management has alleviated instant concerns.

That said, Bahrain has actually been able to rely 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 region given that the war started. High-frequency fiscal information underscore the pressure on regional public financial resources from the dispute.

ANSR July GCC PRs 50DR+

Critical Stock Market Insights for GCC Investors

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 earnings and a surge in costs, particularly on aids, reflecting contingency expenses tied to the local environment and an acceleration of Vision 2030 spending. In Qatar, the crisis brought oil and gas earnings to a stop, swelling the deficit spending to the largest considering that 2017.

GCC inflation dynamics remain irregular, with food rates the primary source of upward pressure and inflation in this classification conditioning in Kuwait, Oman and Qatar. By contrast, food inflation remains fairly controlled in Saudi Arabia, most likely showing the mitigating effect of its larger domestic food production base and greater supply-chain durability.

We continue to see cost pressures as mainly temporal rather than a sign of a sustained inflationary cycle. Accordingly, we anticipate typical inflation to relieve to 2.1% y/y in 2027 as short-term supply-side pressures dissipate. With near-term inflation raised and transit through the Strait likely set to resume gradually, we expect the US Federal Reserve to keep rate of interest on hold up until December, and regional rate policies to do the same.

We expect Iran's GDP to diminish by 10.8% this year (we anticipate a 9.4% contraction 3 months ago). Oil production and exports, which provide essential income and FX inflows, have actually been cut by the US naval blockade, while non-oil activity has actually been severely struck. In Iraq, oil exports have actually collapsed to a trickle 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 global economy after more than a decade of civil war. We anticipate GDP development to average 9.6% over 2026-2027, supported by renewed financial investment, especially in banking and energy, financial reforms, and the progressive resuming of regional trade links.

Driving Economic Growth through Global Diversification

The World Bank has slashed its 2026 growth projection for Middle East economies, stating total GDP growth in the region 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 damage of energy and public infrastructure, had actually interfered with markets, increased monetary volatility, and damaged 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 region's aggregate (excluding the Iran) GDP development will decrease to 1.8 percent in 2026, below 4.0 percent approximated for 2025. The 2026 forecast has actually been devalued by 2.4 portion points considering that the January projections, showing the unfavorable results of the ongoing dispute.

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

Qatar: Significantly, growth forecast for the Qatari economy has seen a sharp decline of 11.0 percentage points because January. The economy is now expected to tape a contraction of 5.7%, below an estimated growth of 5.3%, due to serious blockage to melted gas materials. Qatar is a key gamer in the international energy market, with a global market share of liquefied natural gas (LNG) supplies varying between 20% and 21%.

Kuwait relies completely (100%) on the Strait of Hormuz to export its petroleum and derivatives. Consequently, closing the strait would suggest a total shutdown of the nation's financial lifeline, instantly stopping revenue inflows to the state budget. Bahrain: Growth forecast for Bahrain's economy has actually decreased by 1.8 percentage points given that January.