Strategic Industrial Expansion in 2026

Home rates have come under pressure after a duration of strong growth, with current information from the Dubai Land Department revealing a drop in home loan deals and cash sales. Nevertheless, we think the danger of an enduring migrant outflow and an extreme slump in the realty sector is low.

As a long lasting US-Iran deal takes shape, the fallout from the conflict has actually tightened local monetary conditions, exposing vulnerabilities through capital outflows, larger bond spreads, and weaker investor sentiment. Most GCC sovereigns carry fairly little debt and funding dangers are therefore limited in the UAE, the reserve bank's liquidity management has actually reduced instant concerns.

That stated, Bahrain has had the ability to count on support 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 since the war began. High-frequency financial information underscore the stress on regional public financial resources from the conflict.

ANSR July GCC PRs 50DR+

Essential Equity Capital Strategies for Regional Investors

In Saudi Arabia, the spending plan deficit more than doubled to SAR125.7 bn, or about 9% of GDP in Q1, driven by a decrease in oil earnings and a rise in spending, particularly on aids, 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 since 2017.

GCC inflation characteristics remain unequal, with food costs the primary source of upward pressure and inflation in this category strengthening in Kuwait, Oman and Qatar. By contrast, food inflation stays relatively suppressed in Saudi Arabia, likely showing the mitigating effect of its larger domestic food production base and higher supply-chain strength.

We continue to see price pressures as mostly temporal instead of indicative of a continual inflationary cycle. Appropriately, we anticipate average inflation to reduce 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 expect the US Federal Reserve to keep interest rates on hold till December, and regional rate policies to follow fit.

We anticipate 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 vital earnings and FX inflows, have actually been curtailed by the US marine 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 global economy after more than a years of civil war. We prepare for GDP development to typical 9.6% over 2026-2027, supported by renewed investment, particularly in banking and energy, financial reforms, and the progressive resuming of regional trade links.

Upcoming Regional Economic Outlook

The World Bank has slashed its 2026 growth projection for Middle East economies, stating general GDP development 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 damage of energy and public facilities, had disrupted markets, increased monetary volatility, and compromised 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 anticipates that the area's aggregate (leaving out the Iran) GDP development will slow down to 1.8 percent in 2026, below 4.0 percent approximated for 2025. The 2026 projection has actually been downgraded by 2.4 percentage points since the January projections, reflecting the adverse effects of the continuous conflict.

Saudi Arabia: Forecast was devalued by 1.2 portion 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 remains the strongest among Gulf economies. United Arab Emirates: Growth forecast for the UAE has actually fallen by 2.7 percentage points because January.

Qatar: Especially, development projection for the Qatari economy has actually seen a sharp decrease of 11.0 portion points because January. The economy is now anticipated to record a contraction of 5.7%, down from an approximated growth of 5.3%, due to extreme blockage to liquefied gas supplies. Qatar is an essential player in the global energy market, with a global market share of liquefied natural gas (LNG) supplies varying 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 suggest a complete shutdown of the country's financial lifeline, instantly stopping revenue inflows to the state budget. Bahrain: Growth forecast for Bahrain's economy has decreased by 1.8 portion points because January.