Optimizing Capital Strategies for a Global Economy

Residential or commercial property costs have come under pressure after a duration of strong growth, with recent information from the Dubai Land Department revealing a drop in home mortgage deals and cash sales. We believe the risk of a lasting migrant outflow and a serious recession in the real estate sector is low.

As a lasting US-Iran offer takes shape, the fallout from the dispute has tightened up regional financial conditions, exposing vulnerabilities through capital outflows, wider bond spreads, and weaker financier belief. Many GCC sovereigns carry reasonably little financial obligation and funding risks are therefore restricted in the UAE, the central bank's liquidity management has relieved immediate issues.

That said, Bahrain has been able to count 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 given that the war started. High-frequency financial information underscore the stress on regional public financial resources from the dispute.

ANSR July GCC PRs 50DR+

How Economic Diversification Will Transform Arabian Markets

In Saudi Arabia, the budget plan deficit more than doubled to SAR125.7 bn, or about 9% of GDP in Q1, driven by a decrease in oil profits and a surge in spending, especially on aids, showing contingency investments connected to the regional environment and a velocity of Vision 2030 costs. In Qatar, the crisis brought oil and gas earnings to a halt, swelling the deficit spending to the largest because 2017.

GCC inflation characteristics stay unequal, with food rates the main source of upward pressure and inflation in this classification strengthening in Kuwait, Oman and Qatar. By contrast, food inflation stays fairly controlled in Saudi Arabia, most likely showing the mitigating effect of its larger domestic food production base and greater supply-chain strength.

We continue to view rate pressures as largely temporal rather than a sign of a continual inflationary cycle. Appropriately, we expect average inflation to reduce to 2.1% y/y in 2027 as momentary 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 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 provide essential revenue and FX inflows, have been reduced by the US marine blockade, while non-oil activity has been significantly hit. In Iraq, oil exports have actually collapsed to a trickle 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 years of civil war. We prepare for GDP growth to typical 9.6% over 2026-2027, supported by restored financial investment, particularly in banking and energy, financial reforms, and the steady resuming of local trade links.

Essential Equity Market Insights for Regional Investors

The World Bank has actually slashed its 2026 development forecast for Middle East economies, saying overall GDP growth in the region is anticipated to slow from an approximated 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 actually disrupted markets, increased monetary volatility, and weakened the 2026 growth 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 Hardship Outlook forecasts that the region's aggregate (omitting the Iran) GDP development will decelerate to 1.8 percent in 2026, below 4.0 percent approximated for 2025. The 2026 projection has been reduced by 2.4 percentage points considering that the January projections, showing the adverse results of the continuous dispute.

Saudi Arabia: Projection was devalued by 1.2 percentage points because 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 strongest amongst Gulf economies. United Arab Emirates: Growth projection for the UAE has actually fallen by 2.7 portion points because January.

Qatar: Especially, development forecast for the Qatari economy has seen a sharp decline of 11.0 portion points given that January. The economy is now expected to tape-record a contraction of 5.7%, down from an estimated development of 5.3%, due to severe blockage to melted gas supplies. Qatar is an essential gamer in the worldwide energy market, with an international market share of liquefied gas (LNG) supplies varying in between 20% and 21%.

Kuwait relies completely (100%) on the Strait of Hormuz to export its unrefined oil and derivatives. As a result, closing the strait would suggest a complete shutdown of the nation's monetary lifeline, immediately halting earnings inflows to the state budget. Bahrain: Growth forecast for Bahrain's economy has declined by 1.8 percentage points given that January.