Key Equity Capital Insights for GCC Growth

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 home loan deals and money sales. We believe the threat of an enduring migrant outflow and an extreme downturn in the real estate sector is low.

As a long lasting US-Iran offer takes shape, the fallout from the conflict has actually tightened up regional financial conditions, exposing vulnerabilities through capital outflows, broader bond spreads, and weaker investor belief. Most GCC sovereigns bring relatively little financial obligation and funding risks are therefore restricted in the UAE, the reserve bank's liquidity management has actually alleviated immediate concerns.

That said, Bahrain has had the ability to count on assistance 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 because the war started. High-frequency fiscal data underscore the pressure on regional public financial resources from the conflict.

ANSR July GCC PRs 50DR+

International Capital Opportunities across the Middle East

In Saudi Arabia, the budget 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 costs, particularly on aids, reflecting contingency expenses connected to the local environment and an acceleration of Vision 2030 costs. In Qatar, the crisis brought oil and gas earnings to a halt, swelling the budget plan deficit to the biggest since 2017.

GCC inflation characteristics remain irregular, with food costs the main source of upward pressure and inflation in this classification conditioning in Kuwait, Oman and Qatar. By contrast, food inflation stays relatively subdued in Saudi Arabia, most likely showing the mitigating impact of its bigger domestic food production base and greater supply-chain durability.

We continue to view price pressures as mostly temporal instead of a sign of a continual inflationary cycle. Accordingly, we anticipate average inflation to alleviate 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 slowly, we anticipate the United States Federal Reserve to keep interest rates on hold up until December, and local rate policies to do the same.

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 essential earnings and FX inflows, have been curtailed by the United States marine blockade, while non-oil activity has actually been significantly struck. In Iraq, oil exports have actually collapsed to a drip and we're forecasting 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 global economy after more than a decade of civil war. We prepare for GDP development to average 9.6% over 2026-2027, supported by renewed financial investment, particularly in banking and energy, financial reforms, and the steady resuming of local trade links.

Positioning Middle East Investments for 2026 Shifts

The World Bank has slashed its 2026 development forecast for Middle East economies, stating general GDP growth 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 destruction 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 (excluding the Iran) GDP development will decelerate to 1.8 percent in 2026, down from 4.0 percent estimated for 2025. The 2026 forecast has actually been downgraded by 2.4 portion points because the January projections, reflecting the negative impacts of the continuous dispute.

Saudi Arabia: Forecast was reduced by 1.2 percentage points because January. Growth is now anticipated to slow from 4.3% in 2025 to 3.1% in 2026, keeping in mind that Saudi Arabia's outlook stays the greatest among Gulf economies. United Arab Emirates: Growth forecast for the UAE has actually fallen by 2.7 percentage points because January.

Qatar: Significantly, development forecast for the Qatari economy has seen a sharp decrease of 11.0 portion 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 serious blockage to melted gas materials. Qatar is an essential gamer in the worldwide energy market, with an international market share of melted natural gas (LNG) products ranging 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 monetary 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 since January.