Critical Stock Capital Insights for GCC Growth

Residential or commercial property prices have actually come under pressure after a period of strong growth, with recent information from the Dubai Land Department showing a drop in home mortgage transactions and cash sales. We believe the danger of a lasting migrant outflow and a serious downturn in the real estate sector is low.

As a lasting US-Iran offer takes shape, the fallout from the dispute has tightened up regional monetary conditions, exposing vulnerabilities through capital outflows, broader bond spreads, and weaker financier sentiment. Most GCC sovereigns carry fairly little debt and funding threats are for that reason limited in the UAE, the central bank's liquidity management has actually eased instant concerns.

That stated, Bahrain has been able to rely on support from neighbours, including 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 because the war began. High-frequency financial information underscore the strain on regional public financial resources from the dispute.

ANSR July GCC PRs 50DR+

Advancing Economic Success through Strategic Diversification

In Saudi Arabia, the budget plan deficit more than doubled to SAR125.7 bn, or about 9% of GDP in Q1, driven by a decline in oil profits and a rise in costs, especially on subsidies, reflecting contingency expenses connected to the local environment and a velocity of Vision 2030 spending. In Qatar, the crisis brought oil and gas profits to a stop, swelling the deficit spending to the largest given that 2017.

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

We continue to view cost pressures as mostly transitory rather than indicative of a sustained inflationary cycle. Appropriately, we expect typical inflation to relieve to 2.1% y/y in 2027 as temporary supply-side pressures dissipate. With near-term inflation raised and transit through the Strait likely set to resume slowly, we anticipate the US Federal Reserve to keep rate of interest on hold till December, and local rate policies to follow suit.

We anticipate Iran's GDP to shrink by 10.8% this year (we forecast a 9.4% contraction three months ago). Oil production and exports, which provide important income and FX inflows, have been reduced by the United States marine blockade, while non-oil activity has actually been significantly hit. In Iraq, oil exports have 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 global economy after more than a years of civil war. We expect GDP development to average 9.6% over 2026-2027, supported by restored financial investment, especially in banking and energy, financial reforms, and the steady resuming of local trade links.

How Economic Diversification Can Shape GCC Markets

The World Bank has actually slashed its 2026 growth projection for Middle East economies, saying total GDP growth 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 disrupted markets, increased monetary volatility, and damaged 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 (omitting the Iran) GDP development will slow down to 1.8 percent in 2026, down from 4.0 percent approximated for 2025. The 2026 forecast has been reduced by 2.4 portion points because the January projections, showing the adverse results of the continuous dispute.

Saudi Arabia: Projection was devalued by 1.2 portion points because January. Growth is now anticipated 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: Development forecast for the UAE has actually fallen by 2.7 portion points considering that January.

Qatar: Notably, growth forecast for the Qatari economy has seen a sharp decrease of 11.0 portion points because January. The economy is now expected to tape a contraction of 5.7%, down from an estimated development of 5.3%, due to extreme obstruction to liquefied gas products. Qatar is an essential gamer in the worldwide energy market, with a global 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 total shutdown of the country's monetary lifeline, immediately stopping income inflows to the state budget. Bahrain: Growth projection for Bahrain's economy has decreased by 1.8 portion points because January.