Key International Investment Prospects for the GCC Market

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

As a lasting US-Iran deal takes shape, the fallout from the conflict has tightened up regional monetary conditions, exposing vulnerabilities through capital outflows, wider bond spreads, and weaker financier sentiment. Many GCC sovereigns carry relatively little debt and funding risks are for that reason restricted in the UAE, the reserve bank's liquidity management has eased immediate concerns.

That stated, Bahrain has been able to rely on assistance from neighbours, consisting of 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 considering that the war started. High-frequency fiscal information underscore the stress on regional public finances from the dispute.

ANSR July GCC PRs 50DR+

Global Capital Prospects within the Middle East

In Saudi Arabia, the deficit spending 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 spending, especially on subsidies, showing contingency investments connected to the local environment and a velocity of Vision 2030 spending. In Qatar, the crisis brought oil and gas profits to a stop, swelling the deficit spending to the biggest because 2017.

GCC inflation dynamics remain unequal, with food rates the primary source of upward pressure and inflation in this classification fortifying in Kuwait, Oman and Qatar. By contrast, food inflation stays fairly subdued in Saudi Arabia, likely showing the mitigating impact of its larger domestic food production base and higher supply-chain durability.

We continue to view price pressures as mostly temporal instead of a sign of a continual inflationary cycle. Appropriately, we expect typical inflation to relieve to 2.1% y/y in 2027 as momentary supply-side pressures dissipate. With near-term inflation raised and transit through the Strait 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 fit.

We expect Iran's GDP to diminish by 10.8% this year (we forecast a 9.4% contraction three months ago). Oil production and exports, which supply vital revenue and FX inflows, have actually been curtailed by the US naval blockade, while non-oil activity has been seriously hit. In Iraq, oil exports have collapsed to a drip and we're anticipating 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 typical 9.6% over 2026-2027, supported by renewed investment, especially in banking and energy, monetary reforms, and the steady resuming of regional trade links.

Critical Stock Capital Insights for GCC Growth

The World Bank has slashed its 2026 growth projection for Middle East economies, stating total GDP development in the region is anticipated 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 facilities, had actually disrupted markets, increased financial volatility, and weakened 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 Poverty Outlook forecasts that the region's aggregate (omitting the Iran) GDP development will slow down to 1.8 percent in 2026, below 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: Forecast was downgraded by 1.2 percentage 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 amongst Gulf economies. United Arab Emirates: Development projection for the UAE has actually fallen by 2.7 percentage points because January.

Qatar: Significantly, growth forecast for the Qatari economy has actually seen a sharp decrease of 11.0 percentage points because January. The economy is now expected to tape-record a contraction of 5.7%, down from an estimated development of 5.3%, due to severe obstruction to melted gas materials. Qatar is a crucial gamer in the international energy market, with a worldwide market share of melted natural gas (LNG) supplies varying in between 20% and 21%.

Kuwait relies completely (100%) on the Strait of Hormuz to export its crude oil and derivatives. Consequently, closing the strait would suggest a total shutdown of the country's financial lifeline, right away stopping earnings inflows to the state budget. Bahrain: Development forecast for Bahrain's economy has decreased by 1.8 portion points since January.