Middle East Equity Market Trends in 2026

Property costs have actually come under pressure after a duration of strong development, with current information from the Dubai Land Department showing a drop in home mortgage deals and money sales. We think the threat of a long lasting migrant outflow and a serious downturn in the genuine estate sector is low.

As a lasting US-Iran deal takes shape, the fallout from the conflict has tightened up regional monetary conditions, exposing vulnerabilities through capital outflows, larger bond spreads, and weaker financier sentiment. A lot of GCC sovereigns carry relatively little debt and financing threats are therefore restricted in the UAE, the central bank's liquidity management has eased instant concerns.

That said, Bahrain has had the ability to count on support 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 region considering that the war started. High-frequency fiscal information underscore the strain on local public finances from the dispute.

ANSR July GCC PRs 50DR+

Key Economic Expansion in 2026

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 income and a surge in costs, especially on subsidies, showing contingency outlays connected to the local environment and an acceleration of Vision 2030 spending. In Qatar, the crisis brought oil and gas revenue to a halt, swelling the deficit spending to the biggest considering that 2017.

GCC inflation characteristics remain irregular, with food rates the main source of upward pressure and inflation in this classification strengthening in Kuwait, Oman and Qatar. By contrast, food inflation remains fairly controlled in Saudi Arabia, likely reflecting the mitigating impact of its larger domestic food production base and higher supply-chain strength.

We continue to view price pressures as mainly transitory rather than indicative of a sustained inflationary cycle. Accordingly, we expect typical inflation to ease to 2.1% y/y in 2027 as momentary supply-side pressures dissipate. With near-term inflation elevated and transit through the Strait most likely set to resume slowly, we anticipate the United States Federal Reserve to keep interest rates on hold till December, and local rate policies to follow match.

We expect Iran's GDP to diminish by 10.8% this year (we anticipate a 9.4% contraction 3 months ago). Oil production and exports, which provide important earnings and FX inflows, have actually been reduced by the United States marine blockade, while non-oil activity has actually 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 international economy after more than a years of civil war. We prepare for GDP growth to average 9.6% over 2026-2027, supported by restored financial investment, especially in banking and energy, financial reforms, and the progressive resuming of local trade links.

Why Economic Shifts Can Transform GCC Markets

The World Bank has slashed its 2026 development projection for Middle East economies, stating general GDP growth 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 damage of energy and public facilities, had actually interrupted markets, increased monetary volatility, and weakened the 2026 development 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 region's aggregate (excluding the Iran) GDP development will decrease 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 percentage points given that 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 strongest among Gulf economies. United Arab Emirates: Development forecast for the UAE has fallen by 2.7 portion points because January.

Qatar: Notably, development projection for the Qatari economy has actually seen a sharp decline of 11.0 portion points because January. The economy is now anticipated to tape a contraction of 5.7%, below an estimated development of 5.3%, due to serious obstruction to melted gas materials. Qatar is a crucial player in the worldwide energy market, with a global market share of liquefied gas (LNG) supplies ranging in between 20% and 21%.

Kuwait relies totally (100%) on the Strait of Hormuz to export its petroleum and derivatives. As a result, closing the strait would imply a complete shutdown of the nation's financial lifeline, immediately stopping earnings inflows to the state budget plan. Bahrain: Growth forecast for Bahrain's economy has actually declined by 1.8 portion points because January.