Future Investment Landscape of the GCC

Residential or commercial property rates have come under pressure after a period of strong growth, with current data from the Dubai Land Department revealing a drop in home loan deals and cash sales. Nevertheless, we believe the danger of a long lasting migrant outflow and an extreme recession in the genuine estate sector is low.

As an enduring US-Iran deal takes shape, the fallout from the conflict has tightened up local financial conditions, exposing vulnerabilities through capital outflows, wider bond spreads, and weaker financier belief. A lot of GCC sovereigns bring relatively little financial obligation and financing risks are for that reason limited in the UAE, the main bank's liquidity management has actually alleviated instant issues.

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 started. High-frequency fiscal information underscore the pressure on regional public financial resources from the dispute.

ANSR July GCC PRs 50DR+

Upcoming Regional Market Outlook

In Saudi Arabia, the budget plan deficit more than doubled to SAR125.7 bn, or about 9% of GDP in Q1, driven by a decline in oil earnings and a surge in costs, particularly on subsidies, reflecting contingency expenses tied to the regional environment and an acceleration of Vision 2030 costs. In Qatar, the crisis brought oil and gas earnings to a halt, swelling the budget deficit to the largest given that 2017.

GCC inflation characteristics remain 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 stays relatively subdued in Saudi Arabia, most likely showing the mitigating impact of its larger domestic food production base and higher supply-chain durability.

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

We expect Iran's GDP to shrink by 10.8% this year (we forecast a 9.4% contraction 3 months ago). Oil production and exports, which provide necessary earnings and FX inflows, have actually been reduced by the US naval blockade, while non-oil activity has actually been significantly hit. In Iraq, oil exports have actually collapsed to a trickle and we're anticipating 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 years of civil war. We prepare for GDP development to average 9.6% over 2026-2027, supported by renewed financial investment, particularly in banking and energy, monetary reforms, and the progressive reopening of regional trade links.

Strategic Economic Expansion in the Future

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 strategic Strait of Hormuz, and destruction of energy and public infrastructure, had actually interfered with markets, increased financial volatility, and deteriorated 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 Poverty Outlook forecasts that the area's aggregate (leaving out the Iran) GDP development will slow down to 1.8 percent in 2026, down from 4.0 percent approximated for 2025. The 2026 projection has been reduced by 2.4 portion points because the January projections, showing the adverse results of the ongoing dispute.

Saudi Arabia: Forecast was reduced by 1.2 percentage points given that January. Growth is now anticipated to slow from 4.3% in 2025 to 3.1% in 2026, noting that Saudi Arabia's outlook stays the greatest amongst Gulf economies. United Arab Emirates: Growth forecast for the UAE has actually fallen by 2.7 percentage points given that January.

Qatar: Notably, growth projection for the Qatari economy has actually seen a sharp decline of 11.0 portion 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 blockage to melted gas materials. Qatar is a crucial player in the international energy market, with a worldwide market share of melted gas (LNG) materials varying in between 20% and 21%.

Kuwait relies entirely (100%) on the Strait of Hormuz to export its unrefined oil and derivatives. Consequently, closing the strait would suggest a complete shutdown of the country's financial lifeline, instantly stopping profits inflows to the state budget. Bahrain: Growth projection for Bahrain's economy has actually decreased by 1.8 percentage points given that January.