Key Capital Diversification for the Future

Property rates have come under pressure after a period of strong growth, 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 lasting US-Iran deal takes shape, the fallout from the dispute has actually tightened local monetary conditions, exposing vulnerabilities through capital outflows, wider bond spreads, and weaker investor belief. The majority of GCC sovereigns carry reasonably little debt and funding threats are therefore restricted in the UAE, the reserve bank's liquidity management has actually minimized immediate issues.

That stated, Bahrain has actually been able to rely on assistance from neighbours, including Saudi Arabia and the UAE, and it effectively raised $1bn from an oversubscribed sovereign bond sale this month, marking the very first offering from the area given that the war started. High-frequency financial data highlight the strain on local public financial resources from the dispute.

ANSR July GCC PRs 50DR+

Evaluating GCC Market Resilience for 2026

In Saudi Arabia, the deficit spending 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 costs, especially on subsidies, reflecting contingency outlays tied to the regional environment and a velocity of Vision 2030 costs. In Qatar, the crisis brought oil and gas revenue to a halt, swelling the spending plan deficit to the largest because 2017.

GCC inflation characteristics stay unequal, 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 fairly controlled in Saudi Arabia, most likely reflecting the mitigating effect of its bigger domestic food production base and higher supply-chain strength.

We continue to see price pressures as mostly temporal rather than a sign of a continual inflationary cycle. Accordingly, we anticipate 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 anticipate the United States Federal Reserve to keep rate of interest on hold up until December, and regional rate policies to follow suit.

We anticipate 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 essential income and FX inflows, have been cut by the United States marine blockade, while non-oil activity has been badly struck. In Iraq, oil exports have actually collapsed to a trickle 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 renewed financial investment, especially in banking and energy, monetary reforms, and the gradual reopening of local trade links.

Future Middle Eastern Market Forecasts

The World Bank has actually slashed its 2026 growth projection for Middle East economies, saying general GDP development 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 facilities, 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 Hardship Outlook anticipates that the area's aggregate (leaving out the Iran) GDP growth will decelerate to 1.8 percent in 2026, below 4.0 percent estimated for 2025. The 2026 forecast has been downgraded by 2.4 portion points because the January forecasts, reflecting the negative impacts of the ongoing dispute.

Saudi Arabia: Forecast was devalued by 1.2 percentage points because 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 stays the greatest among Gulf economies. United Arab Emirates: Development forecast for the UAE has actually fallen by 2.7 percentage points considering that January.

Qatar: Significantly, growth projection for the Qatari economy has seen a sharp decline of 11.0 portion points given that January. The economy is now expected to tape-record a contraction of 5.7%, below an estimated development of 5.3%, due to serious blockage to melted gas materials. Qatar is a crucial gamer in the global energy market, with a global market share of melted gas (LNG) supplies ranging between 20% and 21%.

Kuwait relies completely (100%) on the Strait of Hormuz to export its petroleum and derivatives. As a result, closing the strait would mean a total shutdown of the country's monetary lifeline, right away halting income inflows to the state budget plan. Bahrain: Growth projection for Bahrain's economy has declined by 1.8 portion points since January.