Upcoming Middle Eastern Economic Forecasts

Residential or commercial property prices have come under pressure after a period of strong development, with current information from the Dubai Land Department revealing a drop in mortgage transactions and cash sales. We believe the threat of a long lasting migrant outflow and a severe downturn in the genuine estate sector is low.

As a lasting US-Iran offer takes shape, the fallout from the conflict has tightened regional monetary conditions, exposing vulnerabilities through capital outflows, wider bond spreads, and weaker investor sentiment. Most GCC sovereigns bring relatively little financial obligation and financing threats are for that reason limited in the UAE, the main bank's liquidity management has reduced instant issues.

That stated, Bahrain has been able to depend 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 first offering from the region since the war began. High-frequency fiscal information underscore the pressure on regional public finances from the conflict.

ANSR July GCC PRs 50DR+

Evaluating GCC Market Resilience in 2026

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 subsidies, showing contingency investments tied to the regional environment and a velocity of Vision 2030 spending. In Qatar, the crisis brought oil and gas profits to a stop, swelling the budget deficit to the largest considering that 2017.

GCC inflation dynamics remain irregular, with food costs the main source of upward pressure and inflation in this classification fortifying in Kuwait, Oman and Qatar. By contrast, food inflation remains relatively suppressed in Saudi Arabia, likely showing the mitigating impact of its larger domestic food production base and higher supply-chain strength.

We continue to view cost pressures as mostly transitory rather than a sign of a sustained inflationary cycle. Accordingly, we anticipate typical inflation to reduce to 2.1% y/y in 2027 as temporary 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 rate of interest on hold up 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 3 months ago). Oil production and exports, which offer vital revenue and FX inflows, have been reduced by the US naval blockade, while non-oil activity has actually been seriously 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 worldwide economy after more than a decade of civil war. We expect GDP growth to typical 9.6% over 2026-2027, supported by renewed financial investment, especially in banking and energy, monetary reforms, and the steady reopening of regional trade links.

Evaluating GCC Market Resilience for 2026

The World Bank has actually slashed its 2026 development 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 strategic Strait of Hormuz, and damage of energy and public infrastructure, had disrupted markets, increased financial volatility, and weakened the 2026 development 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 area's aggregate (leaving out the Iran) GDP growth will decrease 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 since the January forecasts, showing the adverse impacts of the continuous dispute.

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

Qatar: Especially, growth forecast 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%, below an approximated development of 5.3%, due to serious blockage to melted gas materials. Qatar is a crucial player in the worldwide energy market, with an international market share of melted natural gas (LNG) materials varying in between 20% and 21%.

Kuwait relies totally (100%) on the Strait of Hormuz to export its petroleum and derivatives. Consequently, closing the strait would mean a total shutdown of the nation's financial lifeline, right away halting profits inflows to the state budget plan. Bahrain: Growth forecast for Bahrain's economy has decreased by 1.8 percentage points given that January.