Key Foreign Capital Avenues in the GCC Market

Residential or commercial property prices have come under pressure after a duration of strong growth, with current data from the Dubai Land Department showing a drop in mortgage deals and money sales. Nonetheless, we think the danger of a long lasting migrant outflow and a severe recession in the real estate sector is low.

As an enduring US-Iran deal takes shape, the fallout from the conflict has actually tightened up local financial conditions, exposing vulnerabilities through capital outflows, broader bond spreads, and weaker investor belief. The majority of GCC sovereigns carry reasonably little financial obligation and funding risks are therefore restricted in the UAE, the reserve bank's liquidity management has reduced instant issues.

That stated, Bahrain has had the ability to depend on support from neighbours, including Saudi Arabia and the UAE, and it successfully raised $1bn from an oversubscribed sovereign bond sale this month, marking the first offering from the area given that the war began. High-frequency financial information underscore the stress on regional public finances from the conflict.

ANSR July GCC PRs 50DR+

Emerging Equity Trading Trends in 2026

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 surge in costs, especially on subsidies, showing contingency expenses tied to the regional environment and an acceleration of Vision 2030 spending. In Qatar, the crisis brought oil and gas profits to a halt, swelling the spending plan deficit to the biggest since 2017.

GCC inflation characteristics remain unequal, 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 reasonably controlled in Saudi Arabia, likely reflecting the mitigating effect of its bigger domestic food production base and greater supply-chain strength.

We continue to see rate pressures as largely temporal rather than a sign of a sustained inflationary cycle. Appropriately, we expect average inflation to ease to 2.1% y/y in 2027 as short-term supply-side pressures dissipate. With near-term inflation raised and transit through the Strait likely set to resume gradually, we anticipate the United States 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 profits and FX inflows, have actually been reduced by the United States marine blockade, while non-oil activity has been significantly struck. In Iraq, oil exports have actually 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 international economy after more than a decade of civil war. We expect GDP growth to typical 9.6% over 2026-2027, supported by renewed investment, particularly in banking and energy, financial reforms, and the steady resuming of local trade links.

How Economic Shifts Will Shape GCC Markets

The World Bank has actually slashed its 2026 development forecast for Middle East economies, stating total GDP development in the region is expected 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 infrastructure, had disrupted markets, increased monetary 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 anticipates that the area's aggregate (leaving out the Iran) GDP growth will decelerate to 1.8 percent in 2026, down from 4.0 percent estimated for 2025. The 2026 projection has actually been reduced by 2.4 percentage points given that the January forecasts, showing the unfavorable effects of the continuous dispute.

Saudi Arabia: Projection was devalued by 1.2 percentage points considering that January. Growth is now anticipated to slow from 4.3% in 2025 to 3.1% in 2026, noting that Saudi Arabia's outlook remains the strongest amongst Gulf economies. United Arab Emirates: Growth projection for the UAE has actually fallen by 2.7 portion points since January.

Qatar: Significantly, growth projection for the Qatari economy has actually seen a sharp decrease of 11.0 percentage points since January. The economy is now expected to tape a contraction of 5.7%, below an approximated development of 5.3%, due to severe blockage to liquefied gas materials. Qatar is an essential gamer in the worldwide energy market, with a worldwide market share of melted gas (LNG) products varying between 20% and 21%.

Kuwait relies totally (100%) on the Strait of Hormuz to export its petroleum and derivatives. Subsequently, closing the strait would suggest a complete shutdown of the nation's monetary lifeline, right away halting income inflows to the state spending plan. Bahrain: Development forecast for Bahrain's economy has actually declined by 1.8 portion points because January.