Positioning Regional Portfolios for 2026 Trends

Residential or commercial property rates have actually come under pressure after a period of strong development, with current data from the Dubai Land Department showing a drop in home loan deals and money sales. However, we believe the risk of a lasting migrant outflow and an extreme downturn in the property sector is low.

As a long lasting US-Iran deal takes shape, the fallout from the conflict has actually tightened up local financial conditions, exposing vulnerabilities through capital outflows, larger bond spreads, and weaker investor sentiment. A lot of GCC sovereigns carry relatively little debt and financing risks are for that reason limited in the UAE, the reserve bank's liquidity management has reduced instant concerns.

That said, Bahrain has actually had the ability to rely on assistance from neighbours, consisting of 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 began. High-frequency financial information underscore the stress on regional public finances from the conflict.

ANSR July GCC PRs 50DR+

Securing GCC Portfolios against 2026 Trends

In Saudi Arabia, the budget deficit more than doubled to SAR125.7 bn, or about 9% of GDP in Q1, driven by a decrease in oil income and a rise in costs, especially on subsidies, reflecting contingency outlays connected to the local environment and a velocity of Vision 2030 costs. 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 irregular, with food prices the primary source of upward pressure and inflation in this category conditioning in Kuwait, Oman and Qatar. By contrast, food inflation remains relatively suppressed in Saudi Arabia, likely reflecting the mitigating impact of its larger domestic food production base and greater supply-chain strength.

We continue to view cost pressures as mainly temporal rather than a sign of a sustained inflationary cycle. Accordingly, we anticipate typical inflation to alleviate to 2.1% y/y in 2027 as temporary supply-side pressures dissipate. With near-term inflation elevated and transit through the Strait most likely set to resume gradually, we expect the US Federal Reserve to keep rates of interest on hold up until December, and local rate policies to do the same.

We expect Iran's GDP to diminish by 10.8% this year (we forecast a 9.4% contraction 3 months ago). Oil production and exports, which offer important profits and FX inflows, have been reduced by the US marine blockade, while non-oil activity has been seriously hit. In Iraq, oil exports have actually collapsed to a trickle 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 development to average 9.6% over 2026-2027, supported by renewed financial investment, especially in banking and energy, financial reforms, and the steady reopening of regional trade links.

GCC Equity Market Trends for 2026

The World Bank has actually slashed its 2026 growth projection 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 tactical Strait of Hormuz, and destruction of energy and public infrastructure, had interfered with markets, increased monetary volatility, and damaged 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 anticipates that the region's aggregate (excluding the Iran) GDP growth will decrease to 1.8 percent in 2026, down from 4.0 percent estimated for 2025. The 2026 projection has actually been downgraded by 2.4 percentage points since the January projections, reflecting the unfavorable impacts of the ongoing dispute.

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

Qatar: Significantly, growth forecast for the Qatari economy has actually seen a sharp decrease of 11.0 portion points since January. The economy is now expected to tape-record a contraction of 5.7%, down from an estimated growth of 5.3%, due to severe obstruction to melted gas materials. Qatar is an essential gamer in the international energy market, with an international market share of liquefied gas (LNG) products varying 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 monetary lifeline, instantly halting revenue inflows to the state spending plan. Bahrain: Development forecast for Bahrain's economy has actually decreased by 1.8 percentage points given that January.