International Capital Opportunities across the Middle East

Residential or commercial property costs have actually come under pressure after a period of strong growth, with recent data from the Dubai Land Department revealing a drop in home mortgage transactions and cash sales. Nonetheless, we think the risk of an enduring migrant outflow and an extreme decline in the realty sector is low.

As a long lasting US-Iran deal takes shape, the fallout from the dispute has actually tightened regional financial conditions, exposing vulnerabilities through capital outflows, larger bond spreads, and weaker financier sentiment. A lot of GCC sovereigns carry reasonably little financial obligation and financing risks are for that reason restricted in the UAE, the central bank's liquidity management has actually minimized immediate issues.

That said, Bahrain has actually been able 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 highlight the strain on regional public financial resources from the conflict.

ANSR July GCC PRs 50DR+

The Future Investment Climate in Arabia

In Saudi Arabia, the budget deficit more than doubled to SAR125.7 bn, or about 9% of GDP in Q1, driven by a decline in oil revenue and a rise in costs, especially on aids, reflecting contingency outlays tied to the regional environment and an acceleration of Vision 2030 spending. In Qatar, the crisis brought oil and gas profits to a halt, swelling the deficit spending to the largest since 2017.

GCC inflation characteristics remain unequal, 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 reasonably subdued in Saudi Arabia, most likely reflecting the mitigating result of its larger domestic food production base and higher supply-chain durability.

We continue to view price pressures as largely temporal instead of indicative of a continual inflationary cycle. Accordingly, we anticipate typical inflation to reduce 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 slowly, we anticipate the United States Federal Reserve to keep interest rates on hold until 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 provide vital profits and FX inflows, have been reduced by the United States naval blockade, while non-oil activity has been badly struck. In Iraq, oil exports have actually collapsed to a drip and we're forecasting 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 worldwide economy after more than a decade of civil war. We prepare for GDP development to typical 9.6% over 2026-2027, supported by restored financial investment, particularly in banking and energy, financial reforms, and the steady resuming of local trade links.

Middle East Stock Trading Trends for 2026

The World Bank has actually slashed its 2026 development forecast for Middle East economies, stating total GDP growth in the area is expected 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 infrastructure, had actually interrupted markets, increased monetary volatility, and weakened 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 anticipates 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 projection has been downgraded by 2.4 percentage points because the January projections, reflecting the adverse impacts of the ongoing dispute.

Saudi Arabia: Forecast was downgraded by 1.2 percentage points considering that January. Growth is now anticipated to slow from 4.3% in 2025 to 3.1% in 2026, noting that Saudi Arabia's outlook remains the strongest among Gulf economies. United Arab Emirates: Development forecast for the UAE has fallen by 2.7 percentage points considering that January.

Qatar: Notably, growth projection for the Qatari economy has seen a sharp decrease of 11.0 percentage points since January. The economy is now expected to tape-record a contraction of 5.7%, below an estimated development of 5.3%, due to extreme obstruction to liquefied gas products. Qatar is a crucial player in the international energy market, with an international market share of liquefied gas (LNG) materials ranging between 20% and 21%.

Kuwait relies totally (100%) on the Strait of Hormuz to export its crude oil and derivatives. Closing the strait would suggest a complete shutdown of the nation's monetary lifeline, immediately stopping revenue inflows to the state budget. Bahrain: Development projection for Bahrain's economy has decreased by 1.8 percentage points given that January.