Emerging Stock Market Trends for 2026

Property costs have come under pressure after a period of strong growth, with recent information from the Dubai Land Department revealing a drop in home loan transactions and money sales. Nevertheless, we think the risk of a lasting migrant outflow and a severe downturn in the realty sector is low.

As a long lasting US-Iran deal takes shape, the fallout from the conflict has actually tightened up local monetary conditions, exposing vulnerabilities through capital outflows, broader bond spreads, and weaker financier sentiment. The majority of GCC sovereigns bring fairly little debt and funding risks are for that reason limited in the UAE, the main bank's liquidity management has eased immediate concerns.

That stated, Bahrain has had the ability to count on assistance from neighbours, including Saudi Arabia and the UAE, and it successfully raised $1bn from an oversubscribed sovereign bond sale this month, marking the very first offering from the region since the war began. High-frequency financial data highlight the pressure on regional public finances from the dispute.

ANSR July GCC PRs 50DR+

Strategic Economic Diversification for the Future

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 income and a surge in spending, particularly on aids, reflecting contingency outlays connected to the regional environment and a velocity of Vision 2030 costs. In Qatar, the crisis brought oil and gas revenue to a stop, swelling the deficit spending to the biggest considering that 2017.

GCC inflation dynamics remain irregular, 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 reasonably controlled in Saudi Arabia, likely reflecting the mitigating result of its bigger domestic food production base and higher supply-chain resilience.

We continue to view cost pressures as mostly transitory instead of a sign of a sustained inflationary cycle. Appropriately, we expect typical inflation to reduce to 2.1% y/y in 2027 as short-term supply-side pressures dissipate. With near-term inflation elevated and transit through the Strait likely set to resume slowly, we expect the US Federal Reserve to keep rate of interest on hold until December, and regional rate policies to follow suit.

We anticipate Iran's GDP to diminish by 10.8% this year (we forecast a 9.4% contraction three months ago). Oil production and exports, which provide essential profits and FX inflows, have been cut 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 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 expect GDP growth to average 9.6% over 2026-2027, supported by renewed investment, particularly in banking and energy, financial reforms, and the steady resuming of regional trade links.

Driving Industrial Success via Strategic Diversification

The World Bank has slashed its 2026 growth projection 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 destruction of energy and public facilities, had actually disrupted markets, increased monetary volatility, and damaged 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 Hardship Outlook anticipates that the area's aggregate (leaving out 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 considering that the January projections, showing the unfavorable effects of the ongoing dispute.

Saudi Arabia: Forecast was downgraded by 1.2 portion points because January. Growth is now expected 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 forecast for the UAE has actually fallen by 2.7 percentage points since January.

Qatar: Notably, growth projection for the Qatari economy has actually seen a sharp decrease of 11.0 portion points given that January. The economy is now anticipated to tape-record a contraction of 5.7%, down from an approximated development of 5.3%, due to severe blockage to liquefied gas supplies. Qatar is a crucial player in the global energy market, with a global market share of melted gas (LNG) products varying between 20% and 21%.

Kuwait relies entirely (100%) on the Strait of Hormuz to export its crude oil and derivatives. Subsequently, closing the strait would suggest a total shutdown of the nation's financial lifeline, right away stopping profits inflows to the state spending plan. Bahrain: Growth forecast for Bahrain's economy has decreased by 1.8 percentage points given that January.