Upcoming GCC Market Projections

Property prices have come under pressure after a duration of strong growth, with recent data from the Dubai Land Department showing a drop in mortgage transactions and money sales. We believe the danger of a long lasting migrant outflow and an extreme decline in the real estate sector is low.

As an enduring US-Iran offer takes shape, the fallout from the dispute has actually tightened regional monetary conditions, exposing vulnerabilities through capital outflows, larger bond spreads, and weaker financier sentiment. The majority of GCC sovereigns bring relatively little financial obligation and financing risks are for that reason limited in the UAE, the main bank's liquidity management has minimized instant concerns.

That said, Bahrain has actually been able to depend 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 region since the war began. High-frequency fiscal information highlight the strain on local public financial resources from the conflict.

ANSR July GCC PRs 50DR+

Future Business Climate in Arabia

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 income and a surge in costs, particularly on aids, reflecting contingency expenses tied to the regional environment and a velocity of Vision 2030 costs. In Qatar, the crisis brought oil and gas profits to a stop, swelling the budget plan deficit to the largest considering that 2017.

GCC inflation characteristics stay irregular, with food rates the primary source of upward pressure and inflation in this category strengthening in Kuwait, Oman and Qatar. By contrast, food inflation remains reasonably subdued in Saudi Arabia, likely showing the mitigating impact of its bigger domestic food production base and higher supply-chain durability.

We continue to see rate pressures as mostly temporal instead of indicative of a sustained inflationary cycle. Accordingly, we anticipate average inflation to reduce to 2.1% y/y in 2027 as short-lived supply-side pressures dissipate. With near-term inflation elevated and transit through the Strait most likely set to resume gradually, we anticipate the United States Federal Reserve to keep rate of interest on hold until December, and regional rate policies to do the same.

We expect Iran's GDP to diminish by 10.8% this year (we forecast a 9.4% contraction 3 months ago). Oil production and exports, which offer vital revenue 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 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 prepare for GDP development to average 9.6% over 2026-2027, supported by renewed investment, especially in banking and energy, monetary reforms, and the gradual resuming of regional trade links.

Global Investment Opportunities across the GCC

The World Bank has actually slashed its 2026 development forecast 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 tactical Strait of Hormuz, and damage of energy and public infrastructure, had actually disrupted markets, increased financial volatility, and compromised 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 Hardship Outlook anticipates that the area's aggregate (omitting the Iran) GDP growth will decelerate 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 given that the January forecasts, reflecting the adverse results of the ongoing conflict.

Saudi Arabia: Forecast was reduced by 1.2 percentage points considering that January. Growth 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: Growth projection for the UAE has fallen by 2.7 percentage points because January.

Qatar: Notably, growth projection for the Qatari economy has actually seen a sharp decline of 11.0 percentage points because January. The economy is now anticipated to tape a contraction of 5.7%, down from an approximated development of 5.3%, due to extreme blockage to melted gas materials. Qatar is an essential gamer in the global energy market, with a global market share of liquefied gas (LNG) products varying in between 20% and 21%.

Kuwait relies entirely (100%) on the Strait of Hormuz to export its petroleum and derivatives. Closing the strait would indicate a total shutdown of the nation's financial lifeline, instantly halting earnings inflows to the state budget plan. Bahrain: Growth projection for Bahrain's economy has actually declined by 1.8 percentage points considering that January.