Key Economic Expansion for 2026

Residential or commercial property costs have actually come under pressure after a duration of strong growth, with current information from the Dubai Land Department revealing a drop in mortgage transactions and cash sales. We think the danger of a long lasting migrant outflow and a serious slump in the genuine estate sector is low.

As an enduring US-Iran offer takes shape, the fallout from the dispute has actually tightened up local financial conditions, exposing vulnerabilities through capital outflows, larger bond spreads, and weaker financier sentiment. Most GCC sovereigns bring reasonably little financial obligation and funding threats are for that reason limited in the UAE, the main bank's liquidity management has actually relieved instant issues.

That said, Bahrain has been able to depend on support from neighbours, including Saudi Arabia and the UAE, and it successfully raised $1bn from an oversubscribed sovereign bond sale this month, marking the first offering from the region since the war started. High-frequency financial information underscore the pressure on local public financial resources from the conflict.

ANSR July GCC PRs 50DR+

2026 Business Climate in Arabia

In Saudi Arabia, the spending plan deficit more than doubled to SAR125.7 bn, or about 9% of GDP in Q1, driven by a decline in oil revenue and a surge in spending, especially on aids, showing contingency outlays tied to the local environment and a velocity of Vision 2030 costs. In Qatar, the crisis brought oil and gas income to a stop, swelling the budget plan deficit to the biggest considering that 2017.

GCC inflation dynamics stay uneven, 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, most likely reflecting the mitigating impact of its bigger domestic food production base and greater supply-chain strength.

We continue to view cost pressures as mainly temporal instead of indicative of a sustained inflationary cycle. Appropriately, we anticipate 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 anticipate the United States Federal Reserve to keep interest rates on hold up 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 offer necessary profits and FX inflows, have actually 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 anticipating 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 worldwide economy after more than a decade of civil war. We prepare for GDP development to average 9.6% over 2026-2027, supported by renewed financial investment, particularly in banking and energy, financial reforms, and the steady resuming of regional trade links.

International Investment Opportunities across the GCC

The World Bank has actually slashed its 2026 growth forecast for Middle East economies, saying overall GDP growth 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 interrupted markets, increased monetary volatility, and damaged the 2026 growth 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 (excluding the Iran) GDP growth will decrease to 1.8 percent in 2026, down from 4.0 percent approximated for 2025. The 2026 forecast has been devalued by 2.4 portion points given that the January projections, showing the adverse effects of the ongoing dispute.

Saudi Arabia: Forecast 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 among Gulf economies. United Arab Emirates: Development forecast for the UAE has actually fallen by 2.7 percentage points given that January.

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

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