Securing Middle East Portfolios for 2026 Shifts

Home rates have actually come under pressure after a duration of strong growth, with current data from the Dubai Land Department showing a drop in home loan deals and cash sales. We think the danger of an enduring migrant outflow and an extreme decline in the genuine estate sector is low.

As a lasting US-Iran deal takes shape, the fallout from the conflict has tightened up regional financial conditions, exposing vulnerabilities through capital outflows, larger bond spreads, and weaker investor belief. Many GCC sovereigns bring relatively little debt and funding dangers are for that reason restricted in the UAE, the reserve bank's liquidity management has actually reduced immediate issues.

That said, Bahrain has had the ability 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 first offering from the area given that the war began. High-frequency fiscal information highlight the stress on regional public financial resources from the dispute.

ANSR July GCC PRs 50DR+

GCC Equity Trading Trends for 2026

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 earnings and a rise in costs, particularly on subsidies, reflecting contingency outlays tied 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 budget plan deficit to the largest because 2017.

GCC inflation dynamics remain uneven, with food rates the main source of upward pressure and inflation in this classification conditioning in Kuwait, Oman and Qatar. By contrast, food inflation remains relatively suppressed in Saudi Arabia, most likely showing the mitigating effect of its bigger domestic food production base and greater supply-chain durability.

We continue to view price pressures as mostly temporal rather than a sign of a continual inflationary cycle. Accordingly, we expect average inflation to alleviate to 2.1% y/y in 2027 as temporary supply-side pressures dissipate. With near-term inflation raised and transit through the Strait likely set to resume slowly, we anticipate the US Federal Reserve to keep interest rates on hold 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 offer essential earnings and FX inflows, have actually been curtailed by the United States naval blockade, while non-oil activity has actually been severely 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 international economy after more than a years of civil war. We anticipate GDP development to average 9.6% over 2026-2027, supported by restored investment, especially in banking and energy, monetary reforms, and the gradual reopening of local trade links.

2026 Business Landscape of Arabia

The World Bank has slashed its 2026 growth forecast for Middle East economies, stating overall GDP development in the area is expected to slow from an approximated 3.6% in January to 1.8% for 2026. The closure of the tactical Strait of Hormuz, and damage of energy and public infrastructure, had interfered with markets, increased monetary volatility, and deteriorated the 2026 development 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 anticipates that the area's aggregate (omitting the Iran) GDP development will decrease to 1.8 percent in 2026, below 4.0 percent approximated for 2025. The 2026 projection has actually been devalued by 2.4 portion points considering that the January forecasts, reflecting the negative impacts of the ongoing conflict.

Saudi Arabia: Forecast was reduced by 1.2 percentage points considering that January. Development is now anticipated to slow from 4.3% in 2025 to 3.1% in 2026, keeping in mind that Saudi Arabia's outlook remains the strongest among Gulf economies. United Arab Emirates: Development forecast for the UAE has actually fallen by 2.7 portion points because January.

Qatar: Notably, growth forecast for the Qatari economy has seen a sharp decline of 11.0 portion points since January. The economy is now anticipated to record a contraction of 5.7%, down from an estimated development of 5.3%, due to serious blockage to liquefied gas materials. Qatar is a crucial player in the international energy market, with a worldwide market share of liquefied gas (LNG) supplies varying between 20% and 21%.

Kuwait relies entirely (100%) on the Strait of Hormuz to export its unrefined oil and derivatives. Closing the strait would imply a complete shutdown of the nation's financial lifeline, right away halting income inflows to the state budget plan. Bahrain: Growth forecast for Bahrain's economy has actually declined by 1.8 portion points considering that January.