Key Foreign Capital Prospects in the GCC Region

Residential or commercial property prices have actually come under pressure after a duration of strong growth, with recent data from the Dubai Land Department revealing a drop in home loan transactions and money sales. We believe the threat of a long lasting migrant outflow and an extreme slump in the real estate sector is low.

As a long lasting US-Iran deal takes shape, the fallout from the dispute has actually tightened local financial conditions, exposing vulnerabilities through capital outflows, larger bond spreads, and weaker investor sentiment. The majority of GCC sovereigns bring reasonably little financial obligation and financing risks are therefore restricted in the UAE, the reserve bank's liquidity management has actually relieved immediate concerns.

That stated, Bahrain has been able to count on assistance from neighbours, including Saudi Arabia and the UAE, and it successfully raised $1bn from an oversubscribed sovereign bond sale this month, marking the first offering from the area since the war started. High-frequency financial information highlight the pressure on local public finances from the dispute.

ANSR July GCC PRs 50DR+

Middle East Equity Trading Trends for 2026

In Saudi Arabia, the spending plan deficit more than doubled to SAR125.7 bn, or about 9% of GDP in Q1, driven by a decrease in oil income and a surge in costs, particularly on aids, reflecting contingency expenses connected to the regional environment and a velocity of Vision 2030 costs. In Qatar, the crisis brought oil and gas income to a halt, swelling the spending plan deficit to the biggest given that 2017.

GCC inflation characteristics stay unequal, with food costs the main source of upward pressure and inflation in this category conditioning in Kuwait, Oman and Qatar. By contrast, food inflation stays relatively suppressed in Saudi Arabia, likely reflecting the mitigating effect of its larger domestic food production base and higher supply-chain strength.

We continue to view price pressures as mainly temporal instead of a sign of a continual inflationary cycle. Accordingly, we anticipate typical inflation to relieve to 2.1% y/y in 2027 as temporary supply-side pressures dissipate. With near-term inflation elevated and transit through the Strait most likely set to resume slowly, we expect the United States Federal Reserve to keep rates 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 forecast a 9.4% contraction three months ago). Oil production and exports, which supply necessary income and FX inflows, have actually been cut by the United States naval blockade, while non-oil activity has been seriously hit. In Iraq, oil exports have collapsed to a trickle 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 international economy after more than a decade of civil war. We prepare for GDP growth to typical 9.6% over 2026-2027, supported by renewed financial investment, particularly in banking and energy, financial reforms, and the steady resuming of local trade links.

Securing Middle East Investments for 2026 Trends

The World Bank has actually slashed its 2026 development projection for Middle East economies, stating total GDP growth in the region 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 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 area's aggregate (leaving out the Iran) GDP growth 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 percentage points given that the January projections, reflecting the unfavorable impacts of the ongoing dispute.

Saudi Arabia: Projection was reduced by 1.2 portion points considering that January. Growth is now expected to slow from 4.3% in 2025 to 3.1% in 2026, noting that Saudi Arabia's outlook stays the greatest amongst Gulf economies. United Arab Emirates: Growth forecast for the UAE has actually fallen by 2.7 portion points considering that January.

Qatar: Notably, growth forecast for the Qatari economy has actually seen a sharp decline of 11.0 portion points given that January. The economy is now anticipated to record a contraction of 5.7%, below an estimated development of 5.3%, due to severe obstruction to melted gas materials. Qatar is an essential player in the worldwide energy market, with a worldwide market share of melted natural gas (LNG) supplies ranging between 20% and 21%.

Kuwait relies entirely (100%) on the Strait of Hormuz to export its crude oil and derivatives. As a result, closing the strait would mean a complete shutdown of the country's monetary lifeline, instantly halting income inflows to the state spending plan. Bahrain: Development forecast for Bahrain's economy has actually declined by 1.8 percentage points since January.