Driving Industrial Success through Global Diversification

Property prices have come under pressure after a duration of strong development, with recent information from the Dubai Land Department showing a drop in home mortgage transactions and cash sales. We think the danger of an enduring migrant outflow and a serious slump in the genuine estate sector is low.

As an enduring US-Iran deal takes shape, the fallout from the dispute has tightened up regional monetary conditions, exposing vulnerabilities through capital outflows, broader bond spreads, and weaker financier belief. Many GCC sovereigns bring reasonably little debt and financing threats are for that reason restricted in the UAE, the main bank's liquidity management has alleviated immediate concerns.

That said, Bahrain has been able to rely on assistance from neighbours, consisting of 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 given that the war started. High-frequency financial information underscore the stress on local public financial resources from the dispute.

ANSR July GCC PRs 50DR+

How Industrial Shifts Will Shape GCC Markets

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 rise in spending, particularly on subsidies, showing contingency expenses tied to the local environment and a velocity of Vision 2030 spending. In Qatar, the crisis brought oil and gas income to a stop, swelling the budget plan deficit to the biggest because 2017.

GCC inflation dynamics stay unequal, with food prices 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 effect of its larger domestic food production base and greater supply-chain resilience.

We continue to view price pressures as mostly temporal instead of a sign of a continual inflationary cycle. Appropriately, we anticipate average inflation to reduce to 2.1% y/y in 2027 as temporary supply-side pressures dissipate. With near-term inflation raised and transit through the Strait likely set to resume slowly, we expect the US Federal Reserve to keep rate of interest 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 3 months ago). Oil production and exports, which supply important earnings and FX inflows, have been curtailed by the United States naval blockade, while non-oil activity has been seriously struck. In Iraq, oil exports have actually collapsed to a drip and we're anticipating 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 worldwide economy after more than a decade of civil war. We prepare for GDP development to average 9.6% over 2026-2027, supported by restored financial investment, particularly in banking and energy, financial reforms, and the steady resuming of regional trade links.

Why Industrial Shifts Can Transform GCC Markets

The World Bank has actually slashed its 2026 development projection for Middle East economies, saying overall 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 destruction of energy and public infrastructure, had disrupted markets, increased monetary volatility, and compromised 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 Poverty Outlook forecasts that the region's aggregate (leaving out the Iran) GDP growth will decrease to 1.8 percent in 2026, down from 4.0 percent estimated for 2025. The 2026 forecast has actually been reduced by 2.4 portion points because the January projections, reflecting the unfavorable effects of the continuous dispute.

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

Qatar: Especially, 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 tape-record a contraction of 5.7%, down from an estimated development of 5.3%, due to extreme obstruction to melted gas supplies. Qatar is an essential gamer in the global energy market, with an international market share of liquefied natural gas (LNG) supplies ranging in between 20% and 21%.

Kuwait relies entirely (100%) on the Strait of Hormuz to export its crude oil and derivatives. Closing the strait would mean a total shutdown of the nation's monetary lifeline, instantly halting earnings inflows to the state spending plan. Bahrain: Development forecast for Bahrain's economy has actually decreased by 1.8 percentage points because January.