Key Equity Market Insights for Regional Investors

Property prices have come under pressure after a duration of strong development, with recent data from the Dubai Land Department showing a drop in mortgage deals and money sales. We think the danger of an enduring migrant outflow and an extreme recession in the genuine estate sector is low.

As an enduring US-Iran offer takes shape, the fallout from the conflict has actually tightened up regional monetary conditions, exposing vulnerabilities through capital outflows, wider bond spreads, and weaker financier belief. Most GCC sovereigns carry relatively little financial obligation and funding risks are for that reason restricted in the UAE, the reserve bank's liquidity management has alleviated instant issues.

That said, Bahrain has actually been able to depend on assistance from neighbours, consisting of 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 area since the war started. High-frequency fiscal information underscore the pressure on regional public finances from the conflict.

ANSR July GCC PRs 50DR+

Critical Equity Market Insights for Regional Growth

In Saudi Arabia, the budget deficit more than doubled to SAR125.7 bn, or about 9% of GDP in Q1, driven by a decrease in oil earnings and a rise in spending, particularly on subsidies, reflecting contingency investments connected to the local environment and a velocity of Vision 2030 costs. In Qatar, the crisis brought oil and gas revenue to a halt, swelling the deficit spending to the biggest given that 2017.

GCC inflation characteristics stay 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 stays relatively controlled in Saudi Arabia, likely reflecting the mitigating impact of its larger domestic food production base and greater supply-chain strength.

We continue to see price pressures as mainly temporal instead of a sign of a sustained inflationary cycle. Accordingly, we expect average inflation to alleviate 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 interest rates on hold until December, and regional rate policies to do the same.

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 necessary profits and FX inflows, have actually been reduced by the United States marine blockade, while non-oil activity has been badly struck. In Iraq, oil exports have 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 expect GDP growth to average 9.6% over 2026-2027, supported by restored financial investment, especially in banking and energy, financial reforms, and the steady reopening of regional trade links.

2026 Investment Landscape in the GCC

The World Bank has slashed its 2026 development forecast for Middle East economies, stating general 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 tactical Strait of Hormuz, and damage of energy and public facilities, had interrupted markets, increased monetary volatility, and compromised 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 Hardship Outlook forecasts that the area's aggregate (excluding the Iran) GDP growth will slow down to 1.8 percent in 2026, below 4.0 percent estimated for 2025. The 2026 forecast has actually been downgraded by 2.4 percentage points since the January projections, showing the adverse impacts of the ongoing dispute.

Saudi Arabia: Forecast was devalued by 1.2 portion 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 stays the strongest among Gulf economies. United Arab Emirates: Growth projection for the UAE has fallen by 2.7 percentage points considering that January.

Qatar: Especially, development forecast for the Qatari economy has actually seen a sharp decrease of 11.0 portion points given that January. The economy is now expected to record a contraction of 5.7%, below an estimated development of 5.3%, due to severe obstruction to melted gas materials. Qatar is an essential player in the worldwide energy market, with a global market share of melted gas (LNG) products varying in between 20% and 21%.

Kuwait relies completely (100%) on the Strait of Hormuz to export its petroleum and derivatives. Subsequently, closing the strait would imply a complete shutdown of the country's financial lifeline, instantly halting revenue inflows to the state budget plan. Bahrain: Development forecast for Bahrain's economy has decreased by 1.8 portion points because January.