Key International Capital Avenues for the GCC Market

Home rates 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 deals and cash sales. However, we think the threat of a long lasting migrant outflow and a severe slump in the property sector is low.

As an enduring US-Iran deal takes shape, the fallout from the conflict has actually tightened local monetary conditions, exposing vulnerabilities through capital outflows, wider bond spreads, and weaker financier sentiment. Most GCC sovereigns bring relatively little financial obligation and funding risks are therefore restricted in the UAE, the main bank's liquidity management has actually minimized immediate concerns.

That stated, Bahrain has had the ability to depend on support from neighbours, consisting of Saudi Arabia and the UAE, and it effectively raised $1bn from an oversubscribed sovereign bond sale this month, marking the first offering from the region considering that the war began. High-frequency fiscal data underscore the stress on regional public finances from the conflict.

ANSR July GCC PRs 50DR+

2026 Investment Landscape in the GCC

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 revenue and a surge in costs, especially on subsidies, showing contingency outlays connected to the regional environment and a velocity of Vision 2030 costs. In Qatar, the crisis brought oil and gas income to a stop, swelling the deficit spending to the largest since 2017.

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

We continue to see cost pressures as mainly transitory instead of a sign of a continual inflationary cycle. Appropriately, we anticipate average inflation to ease to 2.1% y/y in 2027 as temporary supply-side pressures dissipate. With near-term inflation elevated and transit through the Strait likely set to resume gradually, we expect the US Federal Reserve to keep interest rates on hold up until December, and local rate policies to do the same.

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 earnings and FX inflows, have been curtailed by the US naval blockade, while non-oil activity has actually been severely struck. In Iraq, oil exports have 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 global economy after more than a years of civil war. We anticipate GDP development to average 9.6% over 2026-2027, supported by restored investment, particularly in banking and energy, financial reforms, and the progressive reopening of regional trade links.

Future GCC Financial Projections

The World Bank has actually slashed its 2026 growth forecast for Middle East economies, saying general GDP growth in the area is anticipated to slow from an approximated 3.6% in January to 1.8% for 2026. The closure of the strategic Strait of Hormuz, and destruction of energy and public infrastructure, had actually disrupted 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 forecasts that the region's aggregate (excluding the Iran) GDP growth will decelerate to 1.8 percent in 2026, down from 4.0 percent estimated for 2025. The 2026 forecast has been downgraded by 2.4 percentage points because the January forecasts, showing the unfavorable results of the continuous conflict.

Saudi Arabia: Projection was devalued by 1.2 portion points given that January. Growth is now expected to slow from 4.3% in 2025 to 3.1% in 2026, noting that Saudi Arabia's outlook stays the strongest among Gulf economies. United Arab Emirates: Development forecast for the UAE has fallen by 2.7 portion points because January.

Qatar: Notably, development forecast for the Qatari economy has seen a sharp decline of 11.0 portion points since January. The economy is now expected to tape a contraction of 5.7%, down from an approximated development of 5.3%, due to serious blockage to liquefied gas supplies. Qatar is a key gamer in the international energy market, with a worldwide market share of melted natural gas (LNG) supplies ranging between 20% and 21%.

Kuwait relies entirely (100%) on the Strait of Hormuz to export its crude oil and derivatives. Subsequently, closing the strait would indicate a complete shutdown of the nation's monetary lifeline, right away halting revenue inflows to the state spending plan. Bahrain: Growth projection for Bahrain's economy has actually decreased by 1.8 percentage points considering that January.