International Investment Prospects within the Middle East

Residential or commercial property rates have actually come under pressure after a period of strong growth, with current data from the Dubai Land Department revealing a drop in home mortgage transactions and money sales. Nonetheless, we think the risk of a long lasting migrant outflow and an extreme downturn in the property sector is low.

As a long lasting 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 investor belief. A lot of GCC sovereigns bring reasonably little debt and funding risks are therefore limited in the UAE, the central bank's liquidity management has actually reduced immediate 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 considering that the war started. High-frequency financial data highlight the strain on regional public financial resources from the conflict.

ANSR July GCC PRs 50DR+

Driving Economic Success via Strategic 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 rise in costs, particularly on aids, showing contingency outlays connected to the regional environment and an acceleration of Vision 2030 spending. In Qatar, the crisis brought oil and gas revenue to a stop, swelling the deficit spending to the largest considering that 2017.

GCC inflation characteristics remain uneven, with food rates the primary source of upward pressure and inflation in this classification strengthening in Kuwait, Oman and Qatar. By contrast, food inflation stays relatively controlled in Saudi Arabia, most likely showing the mitigating effect of its bigger domestic food production base and higher supply-chain durability.

We continue to see price pressures as largely temporal rather than a sign of a continual 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 elevated and transit through the Strait most likely set to resume gradually, we anticipate the United States Federal Reserve to keep rates of interest on hold till December, and regional rate policies to do the same.

We expect 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 essential earnings and FX inflows, have been cut by the US marine blockade, while non-oil activity has actually been significantly hit. In Iraq, oil exports have 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 worldwide economy after more than a decade of civil war. We expect GDP development to average 9.6% over 2026-2027, supported by renewed financial investment, particularly in banking and energy, monetary reforms, and the progressive reopening of regional trade links.

International Capital Opportunities across the Middle East

The World Bank has actually slashed its 2026 development forecast for Middle East economies, saying overall GDP growth in the area is expected to slow from an estimated 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 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 forecasts that the area's aggregate (leaving out the Iran) GDP development will decelerate to 1.8 percent in 2026, below 4.0 percent approximated for 2025. The 2026 projection has actually been reduced by 2.4 percentage points because the January projections, showing the unfavorable results of the ongoing dispute.

Saudi Arabia: Projection was downgraded by 1.2 portion points considering that January. Growth 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: Development forecast for the UAE has actually fallen by 2.7 percentage points since January.

Qatar: Especially, development projection for the Qatari economy has actually seen a sharp decline of 11.0 percentage points given that January. The economy is now expected to tape a contraction of 5.7%, down from an estimated growth of 5.3%, due to extreme blockage to liquefied gas materials. Qatar is an essential player in the worldwide energy market, with a global market share of liquefied gas (LNG) supplies ranging in between 20% and 21%.

Kuwait relies entirely (100%) on the Strait of Hormuz to export its petroleum and derivatives. Consequently, closing the strait would mean a complete shutdown of the nation's monetary lifeline, immediately halting revenue inflows to the state budget. Bahrain: Development projection for Bahrain's economy has decreased by 1.8 portion points given that January.