Advancing Non-Oil Success via Strategic Diversification

Residential or commercial property prices have come under pressure after a duration of strong growth, with current data from the Dubai Land Department revealing a drop in home loan transactions and cash sales. However, we think the threat of a long lasting migrant outflow and a severe slump in the realty sector is low.

As a lasting US-Iran offer takes shape, the fallout from the conflict has tightened regional monetary conditions, exposing vulnerabilities through capital outflows, larger bond spreads, and weaker investor sentiment. The majority of GCC sovereigns carry relatively little debt and funding threats are therefore restricted in the UAE, the central bank's liquidity management has actually eased immediate concerns.

That said, Bahrain has had the ability to rely 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 since the war started. High-frequency financial information highlight the pressure on local public financial resources from the dispute.

ANSR July GCC PRs 50DR+

Essential Stock Market Strategies for Regional Growth

In Saudi Arabia, the deficit spending more than doubled to SAR125.7 bn, or about 9% of GDP in Q1, driven by a decrease in oil revenue and a rise in spending, especially on aids, showing contingency investments connected to the local environment and a velocity of Vision 2030 spending. In Qatar, the crisis brought oil and gas income to a halt, swelling the deficit spending to the biggest considering that 2017.

GCC inflation dynamics remain irregular, with food rates the primary source of upward pressure and inflation in this classification strengthening in Kuwait, Oman and Qatar. By contrast, food inflation remains fairly suppressed in Saudi Arabia, most likely reflecting the mitigating result of its larger domestic food production base and higher supply-chain resilience.

We continue to see rate pressures as mostly transitory rather than indicative of a continual inflationary cycle. Appropriately, we expect average inflation to ease to 2.1% y/y in 2027 as momentary supply-side pressures dissipate. With near-term inflation raised and transit through the Strait most likely set to resume slowly, we anticipate the United States Federal Reserve to keep interest rates on hold until December, and local rate policies to follow suit.

We expect Iran's GDP to diminish by 10.8% this year (we anticipate a 9.4% contraction 3 months ago). Oil production and exports, which offer necessary profits and FX inflows, have actually been reduced by the United States naval blockade, while non-oil activity has actually been badly hit. In Iraq, oil exports have collapsed to a drip and we're forecasting 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 decade of civil war. We prepare for GDP growth to average 9.6% over 2026-2027, supported by renewed investment, particularly in banking and energy, financial reforms, and the steady resuming of local trade links.

Securing Regional Investments against 2026 Shifts

The World Bank has actually slashed its 2026 development forecast for Middle East economies, saying general GDP development in the area is anticipated to slow from an estimated 3.6% in January to 1.8% for 2026. The closure of the tactical Strait of Hormuz, and damage of energy and public infrastructure, had actually 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 Poverty Outlook anticipates that the region's aggregate (omitting the Iran) GDP growth will decrease to 1.8 percent in 2026, down from 4.0 percent approximated for 2025. The 2026 forecast has actually been downgraded by 2.4 percentage points because the January forecasts, showing the unfavorable impacts of the continuous conflict.

Saudi Arabia: Forecast was reduced by 1.2 percentage points because January. Growth is now expected 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: Development forecast for the UAE has actually fallen by 2.7 percentage points since January.

Qatar: Significantly, growth projection for the Qatari economy has seen a sharp decrease of 11.0 percentage points since January. The economy is now anticipated to tape a contraction of 5.7%, below an estimated growth of 5.3%, due to extreme obstruction to liquefied gas materials. Qatar is a key player in the international energy market, with an international market share of melted natural gas (LNG) products varying in between 20% and 21%.

Kuwait relies completely (100%) on the Strait of Hormuz to export its petroleum and derivatives. As a result, closing the strait would imply a total shutdown of the nation's monetary lifeline, right away stopping profits inflows to the state spending plan. Bahrain: Growth projection for Bahrain's economy has decreased by 1.8 portion points considering that January.