Evaluating GCC Market Resilience for 2026

Residential or commercial property prices have come under pressure after a period of strong growth, with recent information from the Dubai Land Department showing a drop in mortgage transactions and money sales. Nevertheless, we think the danger of an enduring migrant outflow and a severe slump in the realty sector is low.

As a lasting US-Iran deal takes shape, the fallout from the conflict has actually tightened up regional monetary conditions, exposing vulnerabilities through capital outflows, larger bond spreads, and weaker investor sentiment. The majority of GCC sovereigns bring relatively little debt and financing dangers are for that reason restricted in the UAE, the central bank's liquidity management has actually reduced immediate issues.

That said, Bahrain has actually been able to depend 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 very first offering from the region because the war began. High-frequency financial data highlight the strain on regional public finances from the dispute.

ANSR July GCC PRs 50DR+

Foreign Investment Opportunities across the GCC

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 rise in spending, particularly on subsidies, showing contingency outlays connected to the regional environment and an acceleration of Vision 2030 costs. In Qatar, the crisis brought oil and gas profits to a stop, swelling the budget plan deficit to the biggest since 2017.

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

We continue to view rate pressures as mainly transitory instead of a sign of a sustained inflationary cycle. Accordingly, we anticipate typical inflation to reduce 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 expect the United States Federal Reserve to keep interest rates on hold till December, and local rate policies to do the same.

We anticipate Iran's GDP to shrink by 10.8% this year (we anticipate a 9.4% contraction three months ago). Oil production and exports, which provide vital income and FX inflows, have actually been curtailed by the United States naval blockade, while non-oil activity has actually been seriously struck. In Iraq, oil exports have collapsed to a drip 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 international economy after more than a years of civil war. We anticipate GDP growth to average 9.6% over 2026-2027, supported by renewed investment, particularly in banking and energy, monetary reforms, and the steady resuming of regional trade links.

2026 Middle Eastern Financial Forecasts

The World Bank has actually slashed its 2026 growth projection for Middle East economies, stating general GDP growth 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 infrastructure, had 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 Hardship Outlook forecasts that the area's aggregate (omitting the Iran) GDP development will decelerate to 1.8 percent in 2026, below 4.0 percent approximated for 2025. The 2026 projection has been downgraded by 2.4 portion points given that the January projections, reflecting the negative effects of the ongoing conflict.

Saudi Arabia: Forecast was downgraded by 1.2 portion points since January. Development 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 strongest among Gulf economies. United Arab Emirates: Development forecast for the UAE has actually fallen by 2.7 portion points because January.

Qatar: Notably, growth projection for the Qatari economy has actually seen a sharp decline of 11.0 portion points considering that January. The economy is now expected to tape a contraction of 5.7%, below an estimated growth of 5.3%, due to serious obstruction to liquefied gas products. Qatar is a crucial player in the international energy market, with a global market share of liquefied gas (LNG) supplies varying in between 20% and 21%.

Kuwait relies totally (100%) on the Strait of Hormuz to export its unrefined oil and derivatives. Closing the strait would indicate a total shutdown of the country's monetary lifeline, instantly halting income inflows to the state budget. Bahrain: Development forecast for Bahrain's economy has actually declined by 1.8 portion points considering that January.