Key Equity Market Insights for GCC Growth

Property rates have come under pressure after a duration of strong growth, with current information from the Dubai Land Department showing a drop in mortgage deals and cash sales. We believe the danger of an enduring migrant outflow and a serious slump in the real estate sector is low.

As an enduring US-Iran deal takes shape, the fallout from the dispute has tightened up local monetary conditions, exposing vulnerabilities through capital outflows, broader bond spreads, and weaker financier sentiment. A lot of GCC sovereigns carry reasonably little debt and funding risks are for that reason restricted in the UAE, the reserve bank's liquidity management has relieved immediate issues.

That stated, Bahrain has had the ability to rely on support from neighbours, including Saudi Arabia and the UAE, and it successfully raised $1bn from an oversubscribed sovereign bond sale this month, marking the very first offering from the area considering that the war began. High-frequency financial data underscore the stress on local public finances from the dispute.

ANSR July GCC PRs 50DR+

Key Equity Capital Insights for GCC Growth

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 aids, showing contingency investments connected to the regional environment and a velocity of Vision 2030 costs. In Qatar, the crisis brought oil and gas earnings to a stop, swelling the spending 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 classification strengthening in Kuwait, Oman and Qatar. By contrast, food inflation stays relatively suppressed in Saudi Arabia, most likely showing the mitigating impact of its bigger domestic food production base and greater supply-chain strength.

We continue to view cost pressures as largely temporal instead of a sign of a sustained inflationary cycle. Accordingly, we expect average inflation to reduce to 2.1% y/y in 2027 as short-term supply-side pressures dissipate. With near-term inflation raised and transit through the Strait likely set to resume gradually, we anticipate the United States Federal Reserve to keep interest rates on hold till December, and local rate policies to follow match.

We anticipate 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 essential income and FX inflows, have been reduced by the United States naval blockade, while non-oil activity has actually been badly hit. In Iraq, oil exports have actually 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 anticipate GDP growth to average 9.6% over 2026-2027, supported by restored investment, particularly in banking and energy, financial reforms, and the gradual reopening of regional trade links.

International Investment Prospects within the Middle East

The World Bank has slashed its 2026 growth projection for Middle East economies, saying total 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 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 Poverty 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 devalued by 2.4 percentage points since the January forecasts, showing the negative results of the continuous dispute.

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

Qatar: Notably, growth forecast for the Qatari economy has actually seen a sharp decrease of 11.0 percentage points because January. The economy is now anticipated to tape-record a contraction of 5.7%, below an estimated growth of 5.3%, due to extreme obstruction to melted gas products. Qatar is an essential player in the worldwide energy market, with an international 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. Closing the strait would suggest a total shutdown of the country's financial lifeline, right away stopping income inflows to the state budget. Bahrain: Growth forecast for Bahrain's economy has declined by 1.8 portion points considering that January.