Future-Proofing GCC Portfolios for 2026 Trends

Residential or commercial property prices have actually come under pressure after a period of strong growth, with recent data from the Dubai Land Department showing a drop in home mortgage transactions and cash sales. Nonetheless, we think the danger of a long lasting migrant outflow and a severe downturn in the realty sector is low.

As a long lasting US-Iran deal takes shape, the fallout from the conflict has actually tightened up local monetary conditions, exposing vulnerabilities through capital outflows, wider bond spreads, and weaker investor belief. The majority of GCC sovereigns bring relatively little financial obligation and financing dangers are for that reason limited in the UAE, the central bank's liquidity management has actually reduced immediate concerns.

That stated, Bahrain has actually had the ability to depend on support from neighbours, including Saudi Arabia and the UAE, and it effectively raised $1bn from an oversubscribed sovereign bond sale this month, marking the first offering from the area since the war began. High-frequency financial data underscore the pressure on local public financial resources from the dispute.

ANSR July GCC PRs 50DR+

Global Capital Opportunities within the Middle East

In Saudi Arabia, the budget plan deficit 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, particularly on subsidies, reflecting contingency investments tied to the local 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 since 2017.

GCC inflation characteristics stay irregular, with food costs the main source of upward pressure and inflation in this classification strengthening in Kuwait, Oman and Qatar. By contrast, food inflation remains reasonably controlled in Saudi Arabia, likely showing the mitigating impact of its bigger domestic food production base and greater supply-chain resilience.

We continue to see cost pressures as largely transitory rather than indicative of a continual inflationary cycle. Appropriately, we expect 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 most likely set to resume slowly, we expect the United States Federal Reserve to keep rates of interest on hold till December, and regional rate policies to follow match.

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 offer important revenue and FX inflows, have actually been reduced by the US naval blockade, while non-oil activity has been seriously struck. In Iraq, oil exports have collapsed to a trickle 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 international economy after more than a decade of civil war. We expect GDP growth to average 9.6% over 2026-2027, supported by restored financial investment, especially in banking and energy, monetary reforms, and the steady resuming of regional trade links.

Securing Regional Portfolios for 2026 Trends

The World Bank has actually slashed its 2026 development forecast for Middle East economies, stating general GDP development in the region is anticipated to slow from an estimated 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 disrupted markets, increased financial 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 (omitting the Iran) GDP development will slow down to 1.8 percent in 2026, down from 4.0 percent estimated for 2025. The 2026 forecast has been downgraded by 2.4 portion points because the January projections, showing the negative impacts of the continuous conflict.

Saudi Arabia: Forecast 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 remains the strongest amongst Gulf economies. United Arab Emirates: Development forecast for the UAE has fallen by 2.7 portion points since January.

Qatar: Notably, growth forecast for the Qatari economy has seen a sharp decline of 11.0 percentage points since January. The economy is now anticipated to record a contraction of 5.7%, below an approximated growth of 5.3%, due to extreme obstruction to liquefied gas products. Qatar is a key player in the international energy market, with an international market share of liquefied gas (LNG) materials ranging in between 20% and 21%.

Kuwait relies completely (100%) on the Strait of Hormuz to export its unrefined oil and derivatives. Closing the strait would mean a complete shutdown of the nation's financial lifeline, right away stopping earnings inflows to the state budget plan. Bahrain: Development forecast for Bahrain's economy has decreased by 1.8 percentage points given that January.