Driving Economic Success via Global Diversification

Home costs 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 money sales. We think the danger of a long lasting migrant outflow and a severe downturn in the real estate sector is low.

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

That said, Bahrain has been able to count 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 area because the war began. High-frequency fiscal data highlight the strain on local public finances from the dispute.

ANSR July GCC PRs 50DR+

Future-Proofing Middle East Investments for 2026 Trends

In Saudi Arabia, the deficit spending more than doubled to SAR125.7 bn, or about 9% of GDP in Q1, driven by a decrease in oil revenue and a surge in spending, 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 deficit spending to the biggest because 2017.

GCC inflation characteristics remain uneven, with food costs the primary source of upward pressure and inflation in this category fortifying in Kuwait, Oman and Qatar. By contrast, food inflation stays relatively subdued in Saudi Arabia, most likely reflecting the mitigating impact of its bigger domestic food production base and greater supply-chain strength.

We continue to see rate pressures as mostly transitory instead of indicative of a continual inflationary cycle. Accordingly, we anticipate average inflation to ease 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 gradually, we anticipate the US Federal Reserve to keep rate of interest on hold up until December, and local rate policies to follow fit.

We expect Iran's GDP to diminish by 10.8% this year (we forecast a 9.4% contraction 3 months ago). Oil production and exports, which offer necessary earnings and FX inflows, have actually been reduced 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 restored financial investment, especially in banking and energy, financial reforms, and the progressive reopening of regional trade links.

Emerging Stock Trading Patterns for 2026

The World Bank has actually slashed its 2026 growth forecast for Middle East economies, saying total GDP development in the region 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 facilities, had actually interrupted markets, increased financial volatility, and deteriorated 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 forecasts that the region's aggregate (omitting the Iran) GDP growth will decrease to 1.8 percent in 2026, down from 4.0 percent estimated for 2025. The 2026 projection has actually been downgraded by 2.4 portion points considering that the January forecasts, reflecting the negative impacts of the continuous conflict.

Saudi Arabia: Projection was downgraded by 1.2 percentage points since January. Development is now anticipated to slow from 4.3% in 2025 to 3.1% in 2026, noting that Saudi Arabia's outlook stays the strongest amongst Gulf economies. United Arab Emirates: Development projection for the UAE has actually fallen by 2.7 percentage points because January.

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

Kuwait relies totally (100%) on the Strait of Hormuz to export its petroleum and derivatives. Subsequently, closing the strait would indicate a total shutdown of the country's monetary lifeline, right away halting revenue inflows to the state budget. Bahrain: Growth projection for Bahrain's economy has actually declined by 1.8 portion points because January.