Assessing GCC Market Potential for 2026

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

As an enduring US-Iran offer takes shape, the fallout from the conflict has actually tightened up local financial conditions, exposing vulnerabilities through capital outflows, wider bond spreads, and weaker financier sentiment. A lot of GCC sovereigns carry relatively little financial obligation and funding dangers are for that reason restricted in the UAE, the main bank's liquidity management has actually reduced immediate concerns.

That stated, Bahrain has been able to rely 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 first offering from the area because the war began. High-frequency fiscal information highlight the strain on regional public finances from the dispute.

ANSR July GCC PRs 50DR+

Top International Capital Avenues in the GCC Market

In Saudi Arabia, the deficit spending more than doubled to SAR125.7 bn, or about 9% of GDP in Q1, driven by a decline in oil profits and a surge in costs, especially on subsidies, showing contingency outlays connected to the local environment and an acceleration of Vision 2030 costs. In Qatar, the crisis brought oil and gas income to a halt, swelling the budget deficit to the largest considering that 2017.

GCC inflation characteristics 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 fairly suppressed in Saudi Arabia, likely reflecting the mitigating impact of its bigger domestic food production base and greater supply-chain strength.

We continue to view price pressures as mostly temporal rather than indicative of a sustained inflationary cycle. Appropriately, we expect typical inflation to relieve to 2.1% y/y in 2027 as temporary supply-side pressures dissipate. With near-term inflation elevated and transit through the Strait likely set to resume gradually, we anticipate the US Federal Reserve to keep rate of interest on hold till December, and regional rate policies to follow match.

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 necessary income and FX inflows, have been reduced 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 worldwide economy after more than a decade of civil war. We expect GDP development to typical 9.6% over 2026-2027, supported by renewed investment, particularly in banking and energy, financial reforms, and the progressive reopening of regional trade links.

Future GCC Market Forecasts

The World Bank has actually slashed its 2026 development projection for Middle East economies, stating total GDP growth in the area is expected 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 interfered with markets, increased monetary volatility, and deteriorated 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 anticipates that the area'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 forecasts, reflecting the negative impacts of the ongoing conflict.

Saudi Arabia: Forecast was devalued by 1.2 portion points because January. Development 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: Development forecast for the UAE has fallen by 2.7 percentage points because January.

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

Kuwait relies entirely (100%) on the Strait of Hormuz to export its petroleum and derivatives. As a result, closing the strait would mean a complete shutdown of the country's financial lifeline, right away halting earnings inflows to the state budget. Bahrain: Growth forecast for Bahrain's economy has decreased by 1.8 percentage points given that January.