International Investment Prospects across the GCC

Home rates have actually come under pressure after a duration of strong growth, with recent information from the Dubai Land Department revealing a drop in home mortgage transactions and cash sales. However, we believe the threat of a lasting migrant outflow and an extreme downturn in the property sector is low.

As an enduring US-Iran offer takes shape, the fallout from the conflict has actually tightened up regional monetary conditions, exposing vulnerabilities through capital outflows, larger bond spreads, and weaker financier belief. Most GCC sovereigns bring reasonably little financial obligation and funding risks are therefore restricted in the UAE, the main bank's liquidity management has actually relieved instant issues.

That stated, Bahrain has had the ability to count on assistance from neighbours, including 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 given that the war began. High-frequency fiscal information highlight the pressure on local public finances from the dispute.

ANSR July GCC PRs 50DR+

Future Middle Eastern Market Projections

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 rise in spending, especially on aids, showing contingency investments tied to the regional environment and a velocity of Vision 2030 spending. In Qatar, the crisis brought oil and gas earnings to a stop, swelling the spending plan deficit to the biggest given that 2017.

GCC inflation characteristics remain uneven, with food rates the main source of upward pressure and inflation in this classification strengthening in Kuwait, Oman and Qatar. By contrast, food inflation stays reasonably suppressed in Saudi Arabia, most likely showing the mitigating result of its larger domestic food production base and higher supply-chain strength.

We continue to view cost pressures as mostly transitory instead of indicative of a sustained inflationary cycle. Accordingly, we expect average inflation to relieve to 2.1% y/y in 2027 as temporary supply-side pressures dissipate. With near-term inflation elevated and transit through the Strait most likely set to resume slowly, we expect the United States Federal Reserve to keep interest rates on hold until December, and local rate policies to do the same.

We anticipate Iran's GDP to diminish by 10.8% this year (we anticipate a 9.4% contraction 3 months ago). Oil production and exports, which offer essential income and FX inflows, have actually been cut by the United States marine blockade, while non-oil activity has been badly hit. In Iraq, oil exports have 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 global economy after more than a decade of civil war. We expect GDP growth to typical 9.6% over 2026-2027, supported by renewed investment, especially in banking and energy, financial reforms, and the gradual reopening of local trade links.

Optimizing Investment Strategies in a 2026 Economy

The World Bank has slashed its 2026 growth projection for Middle East economies, stating general 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 actually interfered with markets, increased financial 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 region's aggregate (excluding the Iran) GDP development will decelerate to 1.8 percent in 2026, down from 4.0 percent estimated for 2025. The 2026 projection has actually been devalued by 2.4 percentage points since the January forecasts, showing the adverse impacts of the ongoing dispute.

Saudi Arabia: Projection was devalued by 1.2 percentage 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 amongst Gulf economies. United Arab Emirates: Growth projection for the UAE has fallen by 2.7 percentage points because January.

Qatar: Notably, growth forecast for the Qatari economy has seen a sharp decrease of 11.0 percentage points given that January. The economy is now expected to tape-record a contraction of 5.7%, down from an estimated development of 5.3%, due to serious obstruction to liquefied gas supplies. Qatar is a crucial gamer in the international energy market, with a global market share of liquefied gas (LNG) supplies varying between 20% and 21%.

Kuwait relies entirely (100%) on the Strait of Hormuz to export its petroleum and derivatives. Consequently, closing the strait would suggest a complete shutdown of the country's monetary lifeline, right away halting revenue inflows to the state budget plan. Bahrain: Growth forecast for Bahrain's economy has declined by 1.8 portion points because January.