Upcoming Regional Financial Forecasts

Home costs have actually come under pressure after a duration of strong development, with current data from the Dubai Land Department showing a drop in home mortgage deals and money sales. Nevertheless, we believe the threat of a lasting migrant outflow and a serious downturn in the genuine estate sector is low.

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

That stated, Bahrain has actually been able to depend on support from neighbours, including 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 since the war began. High-frequency financial information highlight the strain on local public finances from the conflict.

ANSR July GCC PRs 50DR+

Key Equity Market Insights for Regional Growth

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 profits and a surge in spending, particularly on aids, showing contingency outlays connected to the local environment and a velocity of Vision 2030 spending. In Qatar, the crisis brought oil and gas revenue to a halt, swelling the deficit spending to the largest considering that 2017.

GCC inflation dynamics stay unequal, with food prices the primary source of upward pressure and inflation in this classification conditioning in Kuwait, Oman and Qatar. By contrast, food inflation stays fairly controlled in Saudi Arabia, most likely reflecting the mitigating impact of its bigger domestic food production base and higher supply-chain strength.

We continue to see rate pressures as mostly transitory instead of indicative of a sustained inflationary cycle. Appropriately, 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 likely set to resume slowly, we expect the United States Federal Reserve to keep rates of interest on hold up until December, and local rate policies to follow suit.

We expect Iran's GDP to shrink by 10.8% this year (we anticipate a 9.4% contraction 3 months ago). Oil production and exports, which offer essential revenue and FX inflows, have actually been reduced by the US naval blockade, while non-oil activity has actually been badly struck. In Iraq, oil exports have actually collapsed to a trickle and we're forecasting 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 expect GDP growth to typical 9.6% over 2026-2027, supported by renewed financial investment, especially in banking and energy, monetary reforms, and the progressive resuming of regional trade links.

Future-Proofing Middle East Investments for 2026 Shifts

The World Bank has actually slashed its 2026 development forecast for Middle East economies, saying overall GDP growth in the area is anticipated 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 compromised the 2026 growth 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 forecasts that the region's aggregate (excluding the Iran) GDP growth will decrease to 1.8 percent in 2026, below 4.0 percent estimated for 2025. The 2026 projection has been reduced by 2.4 portion points considering that the January projections, reflecting the adverse results of the ongoing conflict.

Saudi Arabia: Forecast was downgraded by 1.2 portion points since January. Development 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 forecast for the UAE has fallen by 2.7 percentage points considering that January.

Qatar: Significantly, growth projection for the Qatari economy has seen a sharp decrease of 11.0 percentage points considering that January. The economy is now expected to tape a contraction of 5.7%, down from an estimated growth of 5.3%, due to serious obstruction to liquefied gas materials. Qatar is a crucial player in the global energy market, with a global market share of melted natural gas (LNG) materials varying between 20% and 21%.

Kuwait relies totally (100%) on the Strait of Hormuz to export its petroleum and derivatives. As a result, closing the strait would imply a total shutdown of the country's monetary lifeline, immediately stopping revenue inflows to the state budget. Bahrain: Development forecast for Bahrain's economy has actually declined by 1.8 percentage points because January.