Foreign Investment Opportunities within the Middle East

Property prices have come under pressure after a duration of strong development, with recent data from the Dubai Land Department showing a drop in home loan transactions and money sales. Nonetheless, we believe the danger of a long lasting migrant outflow and an extreme slump in the realty sector is low.

As an enduring US-Iran offer takes shape, the fallout from the dispute has actually tightened local monetary conditions, exposing vulnerabilities through capital outflows, larger bond spreads, and weaker financier belief. Many GCC sovereigns carry fairly little debt and funding threats are for that reason limited in the UAE, the central bank's liquidity management has actually alleviated immediate concerns.

That said, Bahrain has had the ability to rely on support from neighbours, including 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 since the war started. High-frequency fiscal data highlight the pressure on local public finances from the conflict.

ANSR July GCC PRs 50DR+

How Industrial Shifts Will Transform Arabian Markets

In Saudi Arabia, the budget plan deficit more than doubled to SAR125.7 bn, or about 9% of GDP in Q1, driven by a decrease in oil earnings and a surge in costs, particularly on subsidies, reflecting contingency outlays connected to the regional environment and an acceleration of Vision 2030 costs. In Qatar, the crisis brought oil and gas earnings to a halt, swelling the spending plan deficit to the largest given that 2017.

GCC inflation characteristics remain irregular, with food rates the main source of upward pressure and inflation in this classification conditioning in Kuwait, Oman and Qatar. By contrast, food inflation remains reasonably suppressed in Saudi Arabia, most likely reflecting the mitigating impact of its bigger domestic food production base and higher supply-chain resilience.

We continue to view price pressures as mostly temporal rather than indicative of a sustained inflationary cycle. Accordingly, 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 most likely set to resume slowly, we anticipate the US Federal Reserve to keep rate of interest on hold till December, and local rate policies to follow match.

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 offer essential income and FX inflows, have been reduced by the US naval blockade, while non-oil activity has been significantly struck. 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 worldwide economy after more than a decade of civil war. We prepare for GDP growth to average 9.6% over 2026-2027, supported by renewed financial investment, particularly in banking and energy, monetary reforms, and the progressive resuming of local trade links.

Foreign Investment Opportunities within the GCC

The World Bank has actually slashed its 2026 development forecast for Middle East economies, stating overall GDP growth in the region 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 actually interrupted markets, increased monetary volatility, and damaged the 2026 growth 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 forecasts that the region's aggregate (leaving out the Iran) GDP development will decrease to 1.8 percent in 2026, down from 4.0 percent approximated for 2025. The 2026 forecast has actually been downgraded by 2.4 percentage points since the January projections, reflecting the adverse results of the ongoing dispute.

Saudi Arabia: Projection was downgraded by 1.2 percentage points since January. Growth is now anticipated to slow from 4.3% in 2025 to 3.1% in 2026, keeping in mind that Saudi Arabia's outlook stays the greatest amongst Gulf economies. United Arab Emirates: Development forecast for the UAE has actually fallen by 2.7 percentage points considering that January.

Qatar: Notably, growth forecast for the Qatari economy has actually seen a sharp decline of 11.0 percentage points given that January. The economy is now expected to tape a contraction of 5.7%, down from an approximated growth of 5.3%, due to serious obstruction to liquefied gas materials. Qatar is a crucial player in the worldwide energy market, with a global market share of melted natural gas (LNG) products varying in between 20% and 21%.

Kuwait relies entirely (100%) on the Strait of Hormuz to export its petroleum and derivatives. Subsequently, closing the strait would suggest a complete shutdown of the nation's monetary lifeline, immediately halting earnings inflows to the state budget plan. Bahrain: Growth projection for Bahrain's economy has actually decreased by 1.8 percentage points since January.