Securing GCC Portfolios against 2026 Shifts

Home costs have come under pressure after a period of strong development, with current data from the Dubai Land Department revealing a drop in home loan transactions and money sales. We believe the danger of a long lasting migrant outflow and a serious slump in the real estate sector is low.

As a long lasting US-Iran deal takes shape, the fallout from the dispute has actually tightened up local monetary conditions, exposing vulnerabilities through capital outflows, wider bond spreads, and weaker financier sentiment. A lot of GCC sovereigns carry relatively little debt and financing risks are therefore limited in the UAE, the reserve bank's liquidity management has actually alleviated instant concerns.

That said, Bahrain has had the ability to count on support from neighbours, consisting of Saudi Arabia and the UAE, and it successfully raised $1bn from an oversubscribed sovereign bond sale this month, marking the first offering from the region given that the war began. High-frequency fiscal data underscore the stress on regional public financial resources from the dispute.

ANSR July GCC PRs 50DR+

Key International Investment Avenues for the GCC Region

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 revenue and a rise in costs, especially on aids, reflecting contingency outlays connected to the regional environment and an acceleration of Vision 2030 spending. In Qatar, the crisis brought oil and gas income to a halt, swelling the budget deficit to the largest since 2017.

GCC inflation characteristics stay unequal, with food rates the primary source of upward pressure and inflation in this classification strengthening in Kuwait, Oman and Qatar. By contrast, food inflation stays reasonably suppressed in Saudi Arabia, most likely showing the mitigating result of its larger domestic food production base and greater supply-chain resilience.

We continue to see price pressures as mostly temporal instead of a sign of a continual inflationary cycle. Appropriately, we anticipate typical 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 anticipate the US Federal Reserve to keep rate of interest on hold until December, and regional rate policies to follow suit.

We expect Iran's GDP to diminish by 10.8% this year (we anticipate a 9.4% contraction 3 months ago). Oil production and exports, which supply important earnings and FX inflows, have actually been reduced by the United States naval blockade, while non-oil activity has actually been severely hit. In Iraq, oil exports have actually 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 international economy after more than a years of civil war. We anticipate GDP growth to typical 9.6% over 2026-2027, supported by renewed financial investment, especially in banking and energy, financial reforms, and the gradual resuming of regional trade links.

Key Stock Market Strategies for Regional Growth

The World Bank has actually slashed its 2026 growth forecast for Middle East economies, stating general GDP growth 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 destruction of energy and public infrastructure, had disrupted markets, increased financial 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 forecasts that the area's aggregate (omitting the Iran) GDP growth will slow down to 1.8 percent in 2026, below 4.0 percent estimated for 2025. The 2026 projection has actually been devalued by 2.4 percentage points since the January projections, showing the adverse impacts of the continuous dispute.

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

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

Kuwait relies totally (100%) on the Strait of Hormuz to export its petroleum and derivatives. Subsequently, closing the strait would mean a complete shutdown of the country's financial lifeline, right away stopping earnings inflows to the state budget. Bahrain: Development forecast for Bahrain's economy has actually declined by 1.8 percentage points considering that January.