Critical Stock Capital Insights for GCC Investors

Home costs have come under pressure after a duration of strong growth, with current information from the Dubai Land Department showing a drop in home mortgage deals and money sales. We believe the danger of an enduring migrant outflow and an extreme downturn in the genuine estate sector is low.

As an enduring US-Iran offer takes shape, the fallout from the dispute has tightened up local monetary conditions, exposing vulnerabilities through capital outflows, broader bond spreads, and weaker financier sentiment. Many GCC sovereigns carry fairly little debt and funding dangers are for that reason restricted in the UAE, the central bank's liquidity management has actually minimized immediate concerns.

That said, Bahrain has been able to rely 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 very first offering from the area because the war started. High-frequency fiscal 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 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 rise in costs, especially on aids, reflecting contingency investments tied to the local environment and an acceleration of Vision 2030 costs. In Qatar, the crisis brought oil and gas income to a halt, swelling the budget plan deficit to the largest considering that 2017.

GCC inflation characteristics remain unequal, with food costs the primary source of upward pressure and inflation in this category conditioning in Kuwait, Oman and Qatar. By contrast, food inflation remains reasonably controlled in Saudi Arabia, most likely reflecting the mitigating result of its larger domestic food production base and higher supply-chain strength.

We continue to view cost pressures as largely transitory rather than indicative of a continual inflationary cycle. Accordingly, we expect typical inflation to reduce to 2.1% y/y in 2027 as short-lived supply-side pressures dissipate. With near-term inflation raised and transit through the Strait most likely set to resume slowly, we expect the US Federal Reserve to keep rates of interest on hold until December, and local rate policies to follow match.

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 provide vital revenue and FX inflows, have actually been curtailed by the US marine blockade, while non-oil activity has actually been badly hit. In Iraq, oil exports have actually collapsed to a trickle and we're forecasting 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 restored financial investment, especially in banking and energy, financial reforms, and the progressive resuming of local trade links.

Positioning Regional Portfolios for 2026 Shifts

The World Bank has slashed its 2026 growth projection for Middle East economies, stating general GDP development in the area is anticipated 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 interfered with markets, increased monetary volatility, and compromised 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 Hardship Outlook anticipates that the region's aggregate (omitting the Iran) GDP growth will slow down to 1.8 percent in 2026, below 4.0 percent estimated for 2025. The 2026 projection has been reduced by 2.4 portion points considering that the January forecasts, showing the negative effects of the ongoing dispute.

Saudi Arabia: Projection was downgraded by 1.2 percentage points given 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 remains the greatest among Gulf economies. United Arab Emirates: Development projection 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 percentage points given that January. The economy is now anticipated to tape-record a contraction of 5.7%, down from an estimated growth of 5.3%, due to serious blockage to liquefied gas supplies. Qatar is a crucial gamer in the international energy market, with a global market share of liquefied gas (LNG) materials ranging between 20% and 21%.

Kuwait relies entirely (100%) on the Strait of Hormuz to export its petroleum and derivatives. Closing the strait would imply a total shutdown of the country's monetary lifeline, instantly stopping earnings inflows to the state budget. Bahrain: Development forecast for Bahrain's economy has declined by 1.8 portion points since January.