Essential Industrial Expansion for the Future

Residential or commercial property costs have come under pressure after a period of strong growth, with current information from the Dubai Land Department showing a drop in home loan deals and cash sales. We believe the risk of an enduring migrant outflow and a severe downturn in the real estate sector is low.

As a lasting US-Iran offer takes shape, the fallout from the conflict has tightened up local financial conditions, exposing vulnerabilities through capital outflows, broader bond spreads, and weaker financier belief. The majority of GCC sovereigns carry reasonably little financial obligation and financing threats are for that reason restricted in the UAE, the reserve bank's liquidity management has relieved instant issues.

That said, Bahrain has actually had the ability to depend 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 very first offering from the region considering that the war started. High-frequency financial data underscore the strain on local public financial resources from the dispute.

ANSR July GCC PRs 50DR+

Global Investment Prospects across the GCC

In Saudi Arabia, the spending plan deficit more than doubled to SAR125.7 bn, or about 9% of GDP in Q1, driven by a decrease in oil profits and a surge in spending, especially on aids, reflecting contingency investments tied to the regional environment and a velocity of Vision 2030 spending. In Qatar, the crisis brought oil and gas earnings to a halt, swelling the budget plan deficit to the largest since 2017.

GCC inflation characteristics remain irregular, with food rates the primary source of upward pressure and inflation in this category fortifying in Kuwait, Oman and Qatar. By contrast, food inflation stays relatively suppressed in Saudi Arabia, likely showing the mitigating effect of its larger domestic food production base and higher supply-chain resilience.

We continue to see rate pressures as mostly temporal rather than indicative of a continual inflationary cycle. Appropriately, we expect average 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 likely set to resume gradually, we expect the United States Federal Reserve to keep rate of interest on hold till December, and local rate policies to follow suit.

We anticipate Iran's GDP to shrink 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 curtailed by the United States marine blockade, while non-oil activity has actually been significantly struck. In Iraq, oil exports have actually collapsed to a drip and we're anticipating 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 decade of civil war. We expect GDP development to average 9.6% over 2026-2027, supported by restored financial investment, especially in banking and energy, monetary reforms, and the gradual resuming of local trade links.

Navigating Wealth Diversification in a Global Economy

The World Bank has slashed its 2026 growth projection for Middle East economies, saying overall GDP growth in the region is anticipated to slow from an approximated 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 disrupted markets, increased financial 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 Poverty Outlook anticipates that the area's aggregate (excluding the Iran) GDP development will decelerate to 1.8 percent in 2026, below 4.0 percent approximated for 2025. The 2026 projection has been downgraded by 2.4 portion points given that the January projections, reflecting the negative results of the ongoing dispute.

Saudi Arabia: Forecast was downgraded by 1.2 percentage points since January. Growth is now expected to slow from 4.3% in 2025 to 3.1% in 2026, keeping in mind that Saudi Arabia's outlook remains the greatest among Gulf economies. United Arab Emirates: Growth projection for the UAE has actually fallen by 2.7 percentage points because January.

Qatar: Especially, growth projection for the Qatari economy has seen a sharp decrease of 11.0 portion points given that January. The economy is now anticipated to record a contraction of 5.7%, down from an approximated growth of 5.3%, due to extreme blockage to liquefied gas products. Qatar is a crucial gamer in the international energy market, with a worldwide market share of liquefied gas (LNG) supplies varying in between 20% and 21%.

Kuwait relies totally (100%) on the Strait of Hormuz to export its petroleum and derivatives. Subsequently, closing the strait would mean a total shutdown of the nation's monetary lifeline, immediately stopping earnings inflows to the state budget plan. Bahrain: Development forecast for Bahrain's economy has declined by 1.8 percentage points because January.