Future GCC Economic Projections

Property rates have actually come under pressure after a period of strong development, with current information from the Dubai Land Department showing a drop in mortgage deals and cash sales. We believe the threat of a long lasting migrant outflow and an extreme downturn in the real estate sector is low.

As an enduring US-Iran deal takes shape, the fallout from the dispute has actually tightened regional financial conditions, exposing vulnerabilities through capital outflows, larger bond spreads, and weaker financier sentiment. Most GCC sovereigns bring reasonably little financial obligation and funding threats are therefore limited in the UAE, the central bank's liquidity management has actually reduced immediate issues.

That said, Bahrain has 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 first offering from the area considering that the war started. High-frequency financial information highlight the stress on local public finances from the dispute.

ANSR July GCC PRs 50DR+

Assessing Regional Investment Resilience 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, especially on aids, showing contingency expenses tied to the regional environment and an acceleration of Vision 2030 spending. In Qatar, the crisis brought oil and gas earnings to a halt, swelling the spending plan deficit to the largest because 2017.

GCC inflation characteristics stay unequal, with food rates the main source of upward pressure and inflation in this classification strengthening in Kuwait, Oman and Qatar. By contrast, food inflation remains reasonably suppressed in Saudi Arabia, most likely showing the mitigating effect of its larger domestic food production base and greater supply-chain durability.

We continue to view rate pressures as mostly temporal rather than indicative of a sustained inflationary cycle. Accordingly, we expect average inflation to reduce to 2.1% y/y in 2027 as short-term supply-side pressures dissipate. With near-term inflation raised and transit through the Strait most likely set to resume gradually, we expect the United States Federal Reserve to keep interest rates on hold up until December, and local rate policies to follow match.

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

2026 Investment Landscape in Arabia

The World Bank has actually slashed its 2026 growth forecast for Middle East economies, stating general GDP development in the area is expected to slow from an estimated 3.6% in January to 1.8% for 2026. The closure of the strategic Strait of Hormuz, and destruction of energy and public infrastructure, had interrupted 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 region's aggregate (omitting the Iran) GDP growth will decrease to 1.8 percent in 2026, below 4.0 percent approximated for 2025. The 2026 forecast has been reduced by 2.4 percentage points considering that the January forecasts, showing the unfavorable results of the continuous dispute.

Saudi Arabia: Projection was downgraded by 1.2 portion points considering that 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 greatest amongst Gulf economies. United Arab Emirates: Growth projection for the UAE has actually fallen by 2.7 percentage points because January.

Qatar: Significantly, growth forecast for the Qatari economy has actually seen a sharp decrease of 11.0 percentage points because January. The economy is now expected to record a contraction of 5.7%, down from an estimated growth of 5.3%, due to serious blockage to melted gas materials. Qatar is a crucial player in the global energy market, with a worldwide market share of melted natural gas (LNG) materials ranging in between 20% and 21%.

Kuwait relies totally (100%) on the Strait of Hormuz to export its crude oil and derivatives. Consequently, closing the strait would imply a complete shutdown of the country's monetary lifeline, immediately halting revenue inflows to the state spending plan. Bahrain: Growth projection for Bahrain's economy has actually declined by 1.8 portion points because January.