Key Industrial Expansion for 2026

Residential or commercial property costs have actually come under pressure after a period of strong development, with current data from the Dubai Land Department revealing a drop in home mortgage transactions and money sales. We believe the risk of a lasting migrant outflow and a severe recession in the genuine estate sector is low.

As a long lasting US-Iran deal takes shape, the fallout from the conflict has tightened up regional financial conditions, exposing vulnerabilities through capital outflows, wider bond spreads, and weaker financier belief. The majority of GCC sovereigns carry relatively little debt and financing threats are for that reason limited in the UAE, the reserve bank's liquidity management has actually eased instant concerns.

That stated, Bahrain has actually had the ability to depend on support from neighbours, consisting of 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 started. High-frequency fiscal data highlight the pressure on regional public finances from the dispute.

ANSR July GCC PRs 50DR+

Future-Proofing GCC Investments for 2026 Trends

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 profits and a rise in spending, particularly on subsidies, reflecting contingency outlays connected to the local environment and an acceleration of Vision 2030 spending. In Qatar, the crisis brought oil and gas profits to a stop, swelling the budget plan deficit to the largest given that 2017.

GCC inflation characteristics remain unequal, with food costs the main source of upward pressure and inflation in this category fortifying in Kuwait, Oman and Qatar. By contrast, food inflation remains reasonably subdued in Saudi Arabia, most likely showing the mitigating impact of its larger domestic food production base and greater supply-chain resilience.

We continue to view price pressures as mostly transitory instead of a sign of a sustained inflationary cycle. Appropriately, we anticipate average inflation to relieve to 2.1% y/y in 2027 as short-term supply-side pressures dissipate. With near-term inflation raised and transit through the Strait likely set to resume slowly, we anticipate the US Federal Reserve to keep interest rates on hold up until December, and regional rate policies to follow fit.

We anticipate Iran's GDP to diminish by 10.8% this year (we forecast a 9.4% contraction three months ago). Oil production and exports, which supply necessary profits and FX inflows, have actually been reduced by the US naval blockade, while non-oil activity has been severely struck. In Iraq, oil exports have 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 anticipate GDP development to average 9.6% over 2026-2027, supported by renewed financial investment, particularly in banking and energy, financial reforms, and the gradual resuming of regional trade links.

Key International Capital Prospects for the GCC Market

The World Bank has actually slashed its 2026 growth forecast for Middle East economies, saying total GDP growth in the area is anticipated to slow from an estimated 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 interrupted markets, increased monetary 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 anticipates that the region's aggregate (omitting the Iran) GDP development will decrease to 1.8 percent in 2026, below 4.0 percent approximated for 2025. The 2026 forecast has actually been reduced by 2.4 portion points given that the January forecasts, showing the adverse effects of the ongoing conflict.

Saudi Arabia: Projection was downgraded by 1.2 percentage points because January. Growth is now expected to slow from 4.3% in 2025 to 3.1% in 2026, noting that Saudi Arabia's outlook stays the greatest among Gulf economies. United Arab Emirates: Development projection for the UAE has actually fallen by 2.7 percentage points since January.

Qatar: Notably, development projection for the Qatari economy has actually seen a sharp decrease of 11.0 percentage points since January. The economy is now expected to tape a contraction of 5.7%, down from an approximated growth of 5.3%, due to severe obstruction to liquefied gas materials. Qatar is a crucial gamer in the global energy market, with a global market share of liquefied natural gas (LNG) materials varying between 20% and 21%.

Kuwait relies entirely (100%) on the Strait of Hormuz to export its petroleum and derivatives. Closing the strait would indicate a total shutdown of the country's financial lifeline, immediately stopping profits inflows to the state budget. Bahrain: Growth projection for Bahrain's economy has declined by 1.8 percentage points since January.