Key Equity Market Insights for GCC Investors

Home rates have come under pressure after a duration of strong growth, with recent data from the Dubai Land Department revealing a drop in home mortgage transactions and money sales. We think the danger of a long lasting migrant outflow and a serious recession in the real estate sector is low.

As a long lasting US-Iran offer takes shape, the fallout from the conflict has actually tightened regional monetary conditions, exposing vulnerabilities through capital outflows, broader bond spreads, and weaker financier sentiment. Many GCC sovereigns bring fairly little debt and funding risks are therefore limited in the UAE, the reserve bank's liquidity management has actually eased instant issues.

That said, Bahrain has been able to rely 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 area because the war started. High-frequency financial data highlight the strain on local public finances from the conflict.

ANSR July GCC PRs 50DR+

Accelerating Economic Growth via Strategic Diversification

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 revenue and a surge in costs, particularly on subsidies, reflecting 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 halt, swelling the deficit spending to the biggest given that 2017.

GCC inflation dynamics remain irregular, with food costs the main source of upward pressure and inflation in this classification fortifying in Kuwait, Oman and Qatar. By contrast, food inflation remains relatively subdued in Saudi Arabia, likely showing the mitigating effect of its larger domestic food production base and higher supply-chain strength.

We continue to view rate pressures as mostly temporal rather than a sign of a continual inflationary cycle. Appropriately, we anticipate typical inflation to alleviate to 2.1% y/y in 2027 as short-term supply-side pressures dissipate. With near-term inflation raised and transit through the Strait likely set to resume slowly, we anticipate the United States Federal Reserve to keep rate of interest on hold up until December, and regional rate policies to do the same.

We expect Iran's GDP to shrink by 10.8% this year (we forecast a 9.4% contraction three months ago). Oil production and exports, which supply important revenue and FX inflows, have actually been curtailed by the US marine blockade, while non-oil activity has actually been badly struck. In Iraq, oil exports have collapsed to a trickle 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 worldwide economy after more than a decade of civil war. We anticipate GDP development to typical 9.6% over 2026-2027, supported by restored investment, especially in banking and energy, financial reforms, and the progressive resuming of regional trade links.

Advancing Industrial Success through Strategic Diversification

The World Bank has slashed its 2026 growth forecast for Middle East economies, stating general 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 destruction of energy and public infrastructure, had disrupted markets, increased financial volatility, and weakened 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 forecasts that the region's aggregate (omitting the Iran) GDP growth will decelerate to 1.8 percent in 2026, down from 4.0 percent estimated for 2025. The 2026 projection has been downgraded by 2.4 percentage points since the January forecasts, reflecting the unfavorable effects of the continuous dispute.

Saudi Arabia: Projection was devalued by 1.2 portion points given that January. Growth is now expected to slow from 4.3% in 2025 to 3.1% in 2026, noting that Saudi Arabia's outlook remains the strongest amongst Gulf economies. United Arab Emirates: Growth forecast for the UAE has fallen by 2.7 percentage points because January.

Qatar: Significantly, growth forecast for the Qatari economy has seen a sharp decline of 11.0 portion points given that January. The economy is now expected to tape-record a contraction of 5.7%, below an estimated growth of 5.3%, due to serious obstruction to liquefied gas supplies. Qatar is an essential gamer in the global energy market, with a global market share of melted gas (LNG) products ranging in between 20% and 21%.

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