Essential Capital Shifts for the Future

Property prices have come under pressure after a period of strong growth, with current information from the Dubai Land Department revealing a drop in home loan transactions and cash sales. Nonetheless, we think the risk of a long lasting migrant outflow and a serious slump in the realty sector is low.

As a lasting US-Iran deal takes shape, the fallout from the dispute has tightened regional monetary conditions, exposing vulnerabilities through capital outflows, larger bond spreads, and weaker investor sentiment. A lot of GCC sovereigns carry fairly little debt and financing dangers are for that reason restricted in the UAE, the reserve bank's liquidity management has actually eased instant issues.

That said, Bahrain has actually had the ability to depend on assistance from neighbours, including Saudi Arabia and the UAE, and it effectively raised $1bn from an oversubscribed sovereign bond sale this month, marking the very first offering from the region given that the war started. High-frequency fiscal information underscore the stress on local public financial resources from the conflict.

ANSR July GCC PRs 50DR+

Top International Investment Avenues for the GCC Region

In Saudi Arabia, the spending plan deficit more than doubled to SAR125.7 bn, or about 9% of GDP in Q1, driven by a decline in oil earnings and a surge in costs, especially on aids, reflecting contingency expenses connected to the regional environment and an acceleration of Vision 2030 spending. In Qatar, the crisis brought oil and gas revenue to a halt, swelling the budget deficit to the biggest because 2017.

GCC inflation characteristics stay uneven, with food rates the primary source of upward pressure and inflation in this classification fortifying in Kuwait, Oman and Qatar. By contrast, food inflation remains reasonably controlled in Saudi Arabia, likely showing the mitigating impact of its bigger domestic food production base and greater supply-chain durability.

We continue to see price pressures as largely temporal rather than indicative of a continual inflationary cycle. Appropriately, we anticipate average inflation to ease to 2.1% y/y in 2027 as short-lived supply-side pressures dissipate. With near-term inflation elevated and transit through the Strait most likely set to resume slowly, we anticipate the US Federal Reserve to keep rate of interest on hold until December, and local rate policies to follow suit.

We expect Iran's GDP to diminish by 10.8% this year (we anticipate a 9.4% contraction 3 months ago). Oil production and exports, which offer important profits and FX inflows, have actually been cut by the US naval blockade, while non-oil activity has been significantly hit. 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 years of civil war. We anticipate GDP development to typical 9.6% over 2026-2027, supported by renewed investment, particularly in banking and energy, financial reforms, and the steady reopening of regional trade links.

Key Stock Capital Insights for Regional Investors

The World Bank has slashed its 2026 development projection for Middle East economies, stating overall 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 tactical Strait of Hormuz, and damage of energy and public infrastructure, had actually disrupted markets, increased monetary volatility, and weakened 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 slow down to 1.8 percent in 2026, down from 4.0 percent approximated for 2025. The 2026 forecast has actually been devalued by 2.4 percentage points because the January forecasts, reflecting the adverse effects of the ongoing conflict.

Saudi Arabia: Projection was reduced by 1.2 percentage points given that January. Growth is now anticipated to slow from 4.3% in 2025 to 3.1% in 2026, keeping in mind that Saudi Arabia's outlook stays the greatest among Gulf economies. United Arab Emirates: Development forecast for the UAE has actually fallen by 2.7 portion points because January.

Qatar: Notably, development projection for the Qatari economy has actually seen a sharp decrease of 11.0 percentage points since January. The economy is now anticipated to tape a contraction of 5.7%, down from an estimated development of 5.3%, due to severe obstruction to melted gas supplies. Qatar is a key gamer in the international energy market, with a worldwide market share of melted gas (LNG) materials varying between 20% and 21%.

Kuwait relies completely (100%) on the Strait of Hormuz to export its crude oil and derivatives. Consequently, closing the strait would mean a total shutdown of the country's monetary lifeline, instantly stopping profits inflows to the state spending plan. Bahrain: Development forecast for Bahrain's economy has declined by 1.8 percentage points considering that January.