Evaluating GCC Market Potential for 2026

Residential or commercial property rates have come under pressure after a period of strong development, with current information from the Dubai Land Department revealing a drop in home loan deals and money sales. However, we think the risk of a lasting migrant outflow and a severe slump in the realty sector is low.

As a long lasting US-Iran deal takes shape, the fallout from the conflict has actually tightened up regional financial conditions, exposing vulnerabilities through capital outflows, wider bond spreads, and weaker financier sentiment. Most GCC sovereigns bring relatively little debt and financing risks are therefore limited in the UAE, the central bank's liquidity management has actually alleviated immediate issues.

That said, Bahrain has actually been able to rely on support from neighbours, consisting of 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 area because the war began. High-frequency fiscal data highlight the stress on local public financial resources from the dispute.

ANSR July GCC PRs 50DR+

Top Foreign Investment Avenues for the GCC Region

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 costs, particularly on subsidies, showing contingency investments connected to the local environment and a velocity of Vision 2030 costs. In Qatar, the crisis brought oil and gas earnings to a stop, swelling the deficit spending to the largest considering that 2017.

GCC inflation dynamics remain irregular, with food prices the main source of upward pressure and inflation in this classification strengthening in Kuwait, Oman and Qatar. By contrast, food inflation stays reasonably subdued in Saudi Arabia, likely reflecting the mitigating impact of its bigger domestic food production base and higher supply-chain resilience.

We continue to view cost pressures as mainly temporal rather than indicative of a continual inflationary cycle. Accordingly, we expect typical inflation to alleviate to 2.1% y/y in 2027 as momentary supply-side pressures dissipate. With near-term inflation elevated and transit through the Strait most likely set to resume gradually, we anticipate the United States Federal Reserve to keep interest rates on hold until December, and regional rate policies to do the same.

We anticipate Iran's GDP to shrink by 10.8% this year (we anticipate a 9.4% contraction three months ago). Oil production and exports, which offer important profits and FX inflows, have been reduced by the United States marine blockade, while non-oil activity has actually been significantly hit. In Iraq, oil exports have collapsed to a trickle 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 growth to typical 9.6% over 2026-2027, supported by renewed investment, especially in banking and energy, financial reforms, and the gradual resuming of local trade links.

Key Equity Market Insights for GCC Growth

The World Bank has actually slashed its 2026 development forecast for Middle East economies, saying general 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 disrupted markets, increased financial volatility, and compromised the 2026 growth outlook, the World Bank Group stated 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 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 projection has been reduced by 2.4 portion points because the January projections, showing the adverse impacts of the ongoing dispute.

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

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

Kuwait relies entirely (100%) on the Strait of Hormuz to export its petroleum and derivatives. Closing the strait would mean a total shutdown of the country's monetary lifeline, immediately halting revenue inflows to the state budget. Bahrain: Development forecast for Bahrain's economy has actually declined by 1.8 portion points given that January.