Key Equity Capital Insights for Regional Investors

Property rates have come under pressure after a duration of strong development, with current data from the Dubai Land Department showing a drop in home loan deals and cash sales. Nevertheless, we think the danger of a lasting migrant outflow and a serious decline in the genuine estate sector is low.

As an enduring US-Iran deal takes shape, the fallout from the conflict has actually tightened local financial conditions, exposing vulnerabilities through capital outflows, wider bond spreads, and weaker investor sentiment. Many GCC sovereigns bring reasonably little debt and funding dangers are for that reason restricted in the UAE, the main bank's liquidity management has eased instant concerns.

That stated, Bahrain has had the ability 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 given that the war started. High-frequency financial data underscore the strain on regional public financial resources from the conflict.

ANSR July GCC PRs 50DR+

Advancing Economic Growth through Global Diversification

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 earnings and a surge in spending, especially on aids, reflecting contingency investments tied to the regional environment and an acceleration of Vision 2030 spending. In Qatar, the crisis brought oil and gas earnings to a halt, swelling the deficit spending to the largest because 2017.

GCC inflation characteristics stay uneven, with food prices the main source of upward pressure and inflation in this category fortifying in Kuwait, Oman and Qatar. By contrast, food inflation remains fairly subdued in Saudi Arabia, likely reflecting the mitigating effect of its larger domestic food production base and higher supply-chain strength.

We continue to see price pressures as mostly transitory rather than a sign of a continual inflationary cycle. Appropriately, we anticipate typical inflation to relieve to 2.1% y/y in 2027 as short-lived supply-side pressures dissipate. With near-term inflation raised and transit through the Strait likely set to resume slowly, we anticipate 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 forecast a 9.4% contraction 3 months ago). Oil production and exports, which supply important income and FX inflows, have actually been curtailed by the United States naval blockade, while non-oil activity has actually been severely hit. In Iraq, oil exports have actually collapsed to a drip and we're forecasting 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 global economy after more than a decade of civil war. We expect GDP growth to typical 9.6% over 2026-2027, supported by restored investment, especially in banking and energy, financial reforms, and the steady reopening of local trade links.

Navigating Capital Strategies for a 2026 Economy

The World Bank has actually slashed its 2026 growth forecast for Middle East economies, stating total 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 interrupted markets, increased monetary volatility, and damaged the 2026 development 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 Poverty Outlook anticipates that the region's aggregate (excluding the Iran) GDP growth will slow down to 1.8 percent in 2026, below 4.0 percent approximated for 2025. The 2026 forecast has been downgraded by 2.4 portion points considering that the January projections, showing the negative effects of the ongoing dispute.

Saudi Arabia: Projection was devalued by 1.2 percentage points considering that January. Development 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 strongest amongst Gulf economies. United Arab Emirates: Development forecast for the UAE has fallen by 2.7 portion points given that January.

Qatar: Notably, growth projection for the Qatari economy has actually seen a sharp decline of 11.0 portion points considering 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 liquefied gas products. Qatar is a key gamer in the global energy market, with a worldwide market share of melted natural gas (LNG) materials ranging in between 20% and 21%.

Kuwait relies entirely (100%) on the Strait of Hormuz to export its petroleum and derivatives. As a result, closing the strait would imply a total shutdown of the nation's financial lifeline, right away stopping income inflows to the state budget plan. Bahrain: Growth forecast for Bahrain's economy has declined by 1.8 percentage points since January.