Advancing Economic Success via Global Diversification

Residential or commercial property prices have actually come under pressure after a duration of strong growth, with current data from the Dubai Land Department revealing a drop in home mortgage deals and money sales. However, we believe the threat of a long lasting migrant outflow and a serious slump in the genuine estate sector is low.

As a lasting US-Iran deal takes shape, the fallout from the conflict has actually tightened up local financial conditions, exposing vulnerabilities through capital outflows, wider bond spreads, and weaker investor sentiment. Most GCC sovereigns bring fairly little financial obligation and financing dangers are for that reason restricted in the UAE, the reserve bank's liquidity management has reduced immediate issues.

That stated, Bahrain has actually had the ability 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 very first offering from the area considering that the war started. High-frequency financial data underscore the strain on regional public financial resources from the dispute.

ANSR July GCC PRs 50DR+

Emerging Equity Market Patterns in 2026

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 income and a surge in spending, particularly on subsidies, reflecting contingency expenses connected to the local environment and an acceleration of Vision 2030 spending. In Qatar, the crisis brought oil and gas income to a stop, swelling the budget deficit to the biggest considering that 2017.

GCC inflation dynamics remain unequal, with food prices the primary source of upward pressure and inflation in this classification fortifying in Kuwait, Oman and Qatar. By contrast, food inflation remains relatively controlled in Saudi Arabia, most likely reflecting the mitigating effect of its bigger domestic food production base and greater supply-chain resilience.

We continue to see cost pressures as mainly transitory rather than indicative of a sustained inflationary cycle. Accordingly, we anticipate average inflation to ease to 2.1% y/y in 2027 as short-term supply-side pressures dissipate. With near-term inflation elevated and transit through the Strait most likely set to resume gradually, we anticipate the United States Federal Reserve to keep interest rates on hold up until December, and local rate policies to follow suit.

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 provide important revenue and FX inflows, have been curtailed by the United States naval blockade, while non-oil activity has been seriously struck. In Iraq, oil exports have collapsed to a drip 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 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 reopening of regional trade links.

Why Industrial Diversification Can Transform GCC Markets

The World Bank has slashed its 2026 growth forecast for Middle East economies, stating total GDP growth 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 damage of energy and public infrastructure, had interrupted markets, increased monetary volatility, and deteriorated the 2026 growth 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 anticipates that the region's aggregate (leaving out the Iran) GDP growth will decelerate to 1.8 percent in 2026, below 4.0 percent estimated for 2025. The 2026 forecast has actually been reduced by 2.4 percentage points considering that the January projections, reflecting the negative effects of the ongoing conflict.

Saudi Arabia: Forecast was devalued by 1.2 portion points since 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 remains the greatest amongst Gulf economies. United Arab Emirates: Development projection for the UAE has actually fallen by 2.7 percentage points because January.

Qatar: Significantly, growth projection for the Qatari economy has seen a sharp decline of 11.0 percentage points given that January. The economy is now anticipated to record a contraction of 5.7%, down from an estimated development of 5.3%, due to severe blockage to melted gas materials. Qatar is a key player in the global energy market, with a global market share of liquefied gas (LNG) supplies varying between 20% and 21%.

Kuwait relies entirely (100%) on the Strait of Hormuz to export its crude oil and derivatives. Closing the strait would imply a total shutdown of the nation's financial lifeline, right away stopping profits inflows to the state budget. Bahrain: Development projection for Bahrain's economy has actually decreased by 1.8 percentage points since January.