Foreign Investment Opportunities within the Middle East

Residential or commercial property prices have come under pressure after a duration of strong growth, with recent data from the Dubai Land Department showing a drop in home mortgage deals and cash sales. We think the threat of an enduring migrant outflow and a serious downturn in the real estate sector is low.

As a long lasting US-Iran offer takes shape, the fallout from the conflict has actually tightened regional monetary conditions, exposing vulnerabilities through capital outflows, wider bond spreads, and weaker investor sentiment. Many GCC sovereigns bring fairly little debt and funding threats are for that reason restricted in the UAE, the central bank's liquidity management has actually minimized immediate concerns.

That stated, Bahrain has been able to depend 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 very first offering from the area given that the war began. High-frequency financial data highlight the stress on local public financial resources from the dispute.

ANSR July GCC PRs 50DR+

Accelerating Non-Oil Success through Strategic Diversification

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, particularly on subsidies, showing contingency expenses tied to the regional environment and an acceleration of Vision 2030 spending. In Qatar, the crisis brought oil and gas income to a halt, swelling the deficit spending to the biggest given that 2017.

GCC inflation dynamics stay uneven, with food rates the primary source of upward pressure and inflation in this category strengthening in Kuwait, Oman and Qatar. By contrast, food inflation remains relatively suppressed in Saudi Arabia, most likely reflecting the mitigating result of its bigger domestic food production base and greater supply-chain durability.

We continue to see cost pressures as mainly temporal instead of a sign of a continual inflationary cycle. Appropriately, we anticipate typical 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 gradually, we expect the US Federal Reserve to keep rate of interest on hold up until December, and regional rate policies to follow match.

We expect Iran's GDP to diminish by 10.8% this year (we anticipate a 9.4% contraction three months ago). Oil production and exports, which offer important earnings and FX inflows, have actually been reduced by the United States naval blockade, while non-oil activity has been severely 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 decade of civil war. We expect GDP growth to typical 9.6% over 2026-2027, supported by renewed investment, particularly in banking and energy, monetary reforms, and the gradual reopening of local trade links.

Essential Equity Market Insights for GCC Growth

The World Bank has slashed its 2026 growth projection for Middle East economies, stating overall GDP development 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 infrastructure, had actually interfered with 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 area's aggregate (omitting the Iran) GDP growth will decelerate to 1.8 percent in 2026, down from 4.0 percent approximated for 2025. The 2026 projection has actually been downgraded by 2.4 portion points considering that the January projections, reflecting the negative results of the continuous conflict.

Saudi Arabia: Forecast was downgraded by 1.2 portion points because January. Development 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 amongst Gulf economies. United Arab Emirates: Development forecast for the UAE has actually fallen by 2.7 percentage points given that January.

Qatar: Notably, development forecast for the Qatari economy has seen a sharp decrease of 11.0 percentage points given that January. The economy is now anticipated to tape a contraction of 5.7%, below an estimated development of 5.3%, due to severe blockage to melted gas products. Qatar is a crucial player in the international energy market, with a global 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 crude oil and derivatives. Closing the strait would imply a complete shutdown of the nation's financial lifeline, right away halting income inflows to the state budget plan. Bahrain: Growth forecast for Bahrain's economy has decreased by 1.8 portion points since January.