Key Foreign Capital Prospects in the GCC Region

Home rates have come under pressure after a period of strong growth, with recent data from the Dubai Land Department revealing a drop in mortgage deals and money sales. Nevertheless, we believe the danger of an enduring migrant outflow and a severe decline in the realty sector is low.

As a lasting US-Iran offer takes shape, the fallout from the conflict has tightened up regional financial conditions, exposing vulnerabilities through capital outflows, larger bond spreads, and weaker financier belief. Most GCC sovereigns carry fairly little debt and financing risks are for that reason restricted in the UAE, the reserve bank's liquidity management has reduced instant issues.

That stated, Bahrain has actually had the ability to count 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 considering that the war started. High-frequency financial data highlight the stress on regional public finances from the conflict.

ANSR July GCC PRs 50DR+

Top International Capital Prospects in the GCC Region

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 spending, especially on aids, showing contingency outlays tied to the local environment and a velocity of Vision 2030 costs. In Qatar, the crisis brought oil and gas revenue to a halt, swelling the deficit spending to the biggest since 2017.

GCC inflation dynamics remain uneven, with food prices the main source of upward pressure and inflation in this classification fortifying in Kuwait, Oman and Qatar. By contrast, food inflation stays fairly subdued 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 largely transitory instead of indicative of a sustained inflationary cycle. Appropriately, we expect typical inflation to alleviate 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 gradually, we expect the United States Federal Reserve to keep interest rates on hold until December, and local rate policies to follow match.

We anticipate Iran's GDP to shrink by 10.8% this year (we anticipate a 9.4% contraction three months ago). Oil production and exports, which offer necessary revenue and FX inflows, have actually been reduced by the US marine blockade, while non-oil activity has been badly 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 expect GDP growth to average 9.6% over 2026-2027, supported by restored investment, particularly in banking and energy, monetary reforms, and the gradual reopening of local trade links.

Mastering Capital Diversification for a 2026 Economy

The World Bank has slashed its 2026 development projection for Middle East economies, stating total 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 tactical Strait of Hormuz, and damage of energy and public infrastructure, had actually interfered with markets, increased monetary volatility, and compromised the 2026 development 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 region's aggregate (excluding the Iran) GDP development will decrease to 1.8 percent in 2026, below 4.0 percent approximated for 2025. The 2026 forecast has actually been reduced by 2.4 percentage points considering that the January projections, showing the negative effects of the continuous conflict.

Saudi Arabia: Forecast was reduced by 1.2 percentage points since 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 strongest among Gulf economies. United Arab Emirates: Growth projection for the UAE has fallen by 2.7 portion points given that January.

Qatar: Especially, development forecast for the Qatari economy has actually seen a sharp decrease of 11.0 portion points given that January. The economy is now expected to record a contraction of 5.7%, down from an estimated development of 5.3%, due to extreme blockage to melted gas materials. Qatar is a key player in the global energy market, with a global market share of melted 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 mean a total shutdown of the country's financial lifeline, right away halting revenue inflows to the state budget. Bahrain: Growth projection for Bahrain's economy has actually declined by 1.8 percentage points considering that January.