Upcoming Middle Eastern Economic Forecasts

Property prices have actually come under pressure after a duration of strong development, with current information from the Dubai Land Department revealing a drop in home mortgage transactions and cash sales. Nevertheless, we believe the risk of an enduring migrant outflow and a serious recession in the real estate sector is low.

As a lasting US-Iran deal takes shape, the fallout from the dispute has tightened regional monetary conditions, exposing vulnerabilities through capital outflows, broader bond spreads, and weaker investor belief. The majority of GCC sovereigns carry reasonably little debt and financing threats are for that reason limited in the UAE, the central bank's liquidity management has actually minimized instant concerns.

That said, Bahrain has actually been able to count 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 very first offering from the area since the war began. High-frequency fiscal data underscore the pressure on regional public financial resources from the conflict.

ANSR July GCC PRs 50DR+

Foreign Investment Prospects across the Middle East

In Saudi Arabia, the budget deficit 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 expenses connected to the regional environment and a velocity of Vision 2030 spending. In Qatar, the crisis brought oil and gas income to a halt, swelling the budget deficit to the biggest since 2017.

GCC inflation dynamics remain unequal, with food prices the main source of upward pressure and inflation in this classification fortifying in Kuwait, Oman and Qatar. By contrast, food inflation remains relatively suppressed in Saudi Arabia, likely showing the mitigating impact of its larger domestic food production base and greater supply-chain resilience.

We continue to see rate pressures as largely transitory rather than indicative of a continual inflationary cycle. Accordingly, we anticipate typical inflation to ease to 2.1% y/y in 2027 as temporary supply-side pressures dissipate. With near-term inflation raised and transit through the Strait most likely set to resume slowly, we anticipate the US Federal Reserve to keep interest rates on hold till December, and local 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 supply essential income and FX inflows, have been cut by the US marine blockade, while non-oil activity has actually been significantly hit. In Iraq, oil exports have collapsed to a trickle 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 decade of civil war. We prepare for GDP growth to typical 9.6% over 2026-2027, supported by restored financial investment, especially in banking and energy, financial reforms, and the progressive reopening of regional trade links.

Navigating Capital Strategies in a Global Economy

The World Bank has slashed its 2026 development projection for Middle East economies, saying general GDP development in the area 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 destruction of energy and public facilities, had interrupted markets, increased monetary volatility, and damaged 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 region's aggregate (omitting the Iran) GDP growth will decrease to 1.8 percent in 2026, down from 4.0 percent approximated for 2025. The 2026 projection has been reduced by 2.4 percentage points since the January projections, reflecting the unfavorable results of the ongoing dispute.

Saudi Arabia: Forecast was reduced by 1.2 percentage points given that January. Growth is now anticipated to slow from 4.3% in 2025 to 3.1% in 2026, noting that Saudi Arabia's outlook stays the greatest amongst Gulf economies. United Arab Emirates: Growth projection for the UAE has actually fallen by 2.7 portion points because January.

Qatar: Notably, development forecast for the Qatari economy has actually seen a sharp decline of 11.0 percentage points because January. The economy is now expected to record a contraction of 5.7%, below an approximated development of 5.3%, due to extreme blockage to liquefied gas materials. Qatar is a crucial gamer in the global energy market, with an international market share of melted natural gas (LNG) supplies ranging in between 20% and 21%.

Kuwait relies totally (100%) on the Strait of Hormuz to export its crude oil and derivatives. As a result, closing the strait would imply a complete shutdown of the nation's financial lifeline, right away stopping revenue inflows to the state spending plan. Bahrain: Growth forecast for Bahrain's economy has actually declined by 1.8 percentage points since January.