Analyzing Regional Market Potential in 2026

Residential or commercial property prices have actually come under pressure after a period of strong growth, with current data from the Dubai Land Department showing a drop in home mortgage transactions and money sales. Nonetheless, we believe the danger of an enduring migrant outflow and a serious slump in the property sector is low.

As an enduring US-Iran offer takes shape, the fallout from the conflict has actually tightened regional financial conditions, exposing vulnerabilities through capital outflows, wider bond spreads, and weaker investor belief. The majority of GCC sovereigns bring fairly little debt and financing risks are therefore restricted in the UAE, the central bank's liquidity management has alleviated immediate concerns.

That stated, Bahrain has had the ability to count on support 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 since the war started. High-frequency financial information highlight the strain on local public finances from the dispute.

ANSR July GCC PRs 50DR+

Optimizing Investment Diversification for a 2026 Economy

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 revenue and a surge in spending, especially on aids, showing contingency investments tied to the local environment and a velocity of Vision 2030 spending. In Qatar, the crisis brought oil and gas profits to a stop, swelling the deficit spending to the biggest given that 2017.

GCC inflation dynamics remain uneven, with food costs 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 showing the mitigating impact of its bigger domestic food production base and greater supply-chain resilience.

We continue to view price pressures as mostly temporal rather than indicative of a continual inflationary cycle. Appropriately, we anticipate typical inflation to relieve to 2.1% y/y in 2027 as short-term 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 rates of interest on hold up until December, and local rate policies to follow fit.

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 profits and FX inflows, have actually been curtailed by the United States marine blockade, while non-oil activity has been severely hit. In Iraq, oil exports have collapsed to a drip 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 international economy after more than a years of civil war. We expect GDP development to typical 9.6% over 2026-2027, supported by restored financial investment, especially in banking and energy, financial reforms, and the gradual resuming of regional trade links.

GCC Equity Market Patterns for 2026

The World Bank has actually slashed its 2026 development projection for Middle East economies, saying total GDP growth in the area is expected to slow from an approximated 3.6% in January to 1.8% for 2026. The closure of the strategic Strait of Hormuz, and damage of energy and public infrastructure, had interfered with markets, increased financial volatility, and weakened 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 Poverty Outlook forecasts that the area's aggregate (omitting the Iran) GDP growth will decrease to 1.8 percent in 2026, down from 4.0 percent estimated for 2025. The 2026 forecast has been devalued by 2.4 percentage points since the January forecasts, showing the adverse results of the ongoing dispute.

Saudi Arabia: Projection was reduced by 1.2 portion points given that January. Growth is now expected 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: Growth projection for the UAE has actually fallen by 2.7 portion points given that January.

Qatar: Significantly, development projection for the Qatari economy has seen a sharp decrease of 11.0 portion points given that January. The economy is now anticipated to tape-record a contraction of 5.7%, down from an estimated growth of 5.3%, due to extreme blockage to liquefied gas supplies. Qatar is an essential gamer in the global energy market, with a global market share of liquefied natural gas (LNG) materials varying between 20% and 21%.

Kuwait relies entirely (100%) on the Strait of Hormuz to export its petroleum and derivatives. Subsequently, closing the strait would imply a total shutdown of the country's monetary lifeline, right away halting revenue inflows to the state budget plan. Bahrain: Growth forecast for Bahrain's economy has declined by 1.8 portion points because January.