Essential Economic Shifts for 2026

Residential or commercial property prices have come under pressure after a period of strong growth, with recent information from the Dubai Land Department showing a drop in mortgage deals and money sales. We think the danger of a long lasting migrant outflow and a serious slump in the genuine estate sector is low.

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

That stated, Bahrain has actually had the ability to count on support from neighbours, including Saudi Arabia and the UAE, and it effectively raised $1bn from an oversubscribed sovereign bond sale this month, marking the very first offering from the area because the war began. High-frequency fiscal information underscore the strain on regional public finances from the conflict.

ANSR July GCC PRs 50DR+

2026 GCC Economic Projections

In Saudi Arabia, the spending 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 surge in spending, particularly on aids, showing contingency expenses connected to the local environment and a velocity of Vision 2030 costs. In Qatar, the crisis brought oil and gas earnings to a stop, swelling the deficit spending to the biggest considering that 2017.

GCC inflation dynamics stay uneven, with food prices the main source of upward pressure and inflation in this category conditioning in Kuwait, Oman and Qatar. By contrast, food inflation remains fairly controlled in Saudi Arabia, most likely showing the mitigating result of its larger domestic food production base and higher supply-chain resilience.

We continue to see price pressures as largely temporal instead of a sign of a sustained inflationary cycle. Accordingly, we anticipate typical inflation to relieve 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 United States Federal Reserve to keep rate of interest on hold until December, and regional rate policies to do the same.

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 offer necessary earnings and FX inflows, have been cut by the US marine blockade, while non-oil activity has actually been badly struck. In Iraq, oil exports have actually 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 typical 9.6% over 2026-2027, supported by restored financial investment, particularly in banking and energy, financial reforms, and the progressive reopening of regional trade links.

Navigating Investment Diversification for a 2026 Economy

The World Bank has slashed its 2026 growth projection for Middle East economies, stating general GDP growth in the area is expected 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 financial volatility, and weakened the 2026 growth 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 forecasts that the area'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 projection has actually been reduced by 2.4 percentage points given that the January projections, showing the negative impacts of the continuous dispute.

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

Qatar: Especially, growth forecast for the Qatari economy has actually seen a sharp decline of 11.0 percentage points given that January. The economy is now expected to tape a contraction of 5.7%, below an estimated growth of 5.3%, due to severe obstruction to melted gas products. Qatar is an essential gamer in the worldwide energy market, with an international market share of liquefied natural gas (LNG) materials ranging in between 20% and 21%.

Kuwait relies completely (100%) on the Strait of Hormuz to export its petroleum and derivatives. Subsequently, closing the strait would suggest a total shutdown of the country's financial lifeline, right away halting income inflows to the state spending plan. Bahrain: Growth projection for Bahrain's economy has actually declined by 1.8 percentage points considering that January.