Upcoming GCC Economic Outlook

Property rates have actually come under pressure after a period of strong development, with current data from the Dubai Land Department showing a drop in mortgage deals and cash sales. We believe the risk of a long lasting migrant outflow and a severe slump in the real estate sector is low.

As a long lasting US-Iran deal takes shape, the fallout from the dispute has tightened regional monetary conditions, exposing vulnerabilities through capital outflows, wider bond spreads, and weaker investor belief. The majority of GCC sovereigns carry fairly little financial obligation and funding threats are for that reason restricted in the UAE, the central bank's liquidity management has actually eased immediate issues.

That stated, Bahrain has had the ability to count on assistance 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 began. High-frequency financial data highlight the pressure on regional public finances from the dispute.

ANSR July GCC PRs 50DR+

Future Regional Market Projections

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 earnings and a rise in spending, particularly on subsidies, showing contingency investments connected to the local environment and an acceleration of Vision 2030 spending. In Qatar, the crisis brought oil and gas revenue to a halt, swelling the spending plan deficit to the largest because 2017.

GCC inflation dynamics stay unequal, with food costs the main 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, likely showing the mitigating result of its larger domestic food production base and higher supply-chain durability.

We continue to view price pressures as mainly temporal rather than a sign of a continual inflationary cycle. Accordingly, we anticipate typical inflation to reduce to 2.1% y/y in 2027 as momentary supply-side pressures dissipate. With near-term inflation elevated and transit through the Strait likely set to resume slowly, we expect the US Federal Reserve to keep rates of interest on hold until December, and regional rate policies to follow fit.

We anticipate Iran's GDP to diminish by 10.8% this year (we anticipate a 9.4% contraction 3 months ago). Oil production and exports, which provide vital profits and FX inflows, have actually been cut by the US naval blockade, while non-oil activity has actually been significantly hit. In Iraq, oil exports have 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 international economy after more than a years of civil war. We prepare for GDP growth to average 9.6% over 2026-2027, supported by restored financial investment, especially in banking and energy, financial reforms, and the progressive resuming of local trade links.

Middle East Stock Market Patterns in 2026

The World Bank has actually slashed its 2026 growth projection for Middle East economies, saying overall GDP development 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 damage of energy and public infrastructure, had interrupted markets, increased monetary volatility, and compromised 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 area's aggregate (omitting the Iran) GDP development will slow down to 1.8 percent in 2026, down from 4.0 percent approximated for 2025. The 2026 forecast has actually been devalued by 2.4 percentage points because the January forecasts, showing the negative results of the continuous dispute.

Saudi Arabia: Forecast was devalued by 1.2 portion 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 remains the greatest among Gulf economies. United Arab Emirates: Growth forecast for the UAE has fallen by 2.7 percentage points because January.

Qatar: Notably, development forecast for the Qatari economy has seen a sharp decrease of 11.0 percentage points since January. The economy is now expected to record a contraction of 5.7%, below an approximated development of 5.3%, due to serious blockage to melted gas materials. Qatar is a crucial player in the worldwide energy market, with an international market share of liquefied gas (LNG) products ranging in between 20% and 21%.

Kuwait relies completely (100%) on the Strait of Hormuz to export its crude oil and derivatives. Closing the strait would mean a complete shutdown of the nation's financial lifeline, immediately halting earnings inflows to the state spending plan. Bahrain: Development projection for Bahrain's economy has actually declined by 1.8 percentage points considering that January.