Middle East Stock Market Patterns in 2026

Property prices have actually come under pressure after a duration of strong growth, with recent data from the Dubai Land Department showing a drop in home loan transactions and money sales. We believe the threat of a long lasting migrant outflow and a serious slump in the genuine estate sector is low.

As a lasting US-Iran deal takes shape, the fallout from the conflict has actually tightened up regional monetary conditions, exposing vulnerabilities through capital outflows, wider bond spreads, and weaker financier sentiment. Many GCC sovereigns bring relatively little financial obligation and funding threats are for that reason restricted in the UAE, the central bank's liquidity management has actually alleviated immediate issues.

That stated, Bahrain has actually been able 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 area since the war started. High-frequency fiscal data underscore the pressure on regional public financial resources from the dispute.

ANSR July GCC PRs 50DR+

Future Investment Climate in the GCC

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 earnings and a surge in spending, especially on subsidies, reflecting contingency outlays connected to the local environment and a velocity of Vision 2030 spending. In Qatar, the crisis brought oil and gas profits to a halt, swelling the budget deficit to the biggest given that 2017.

GCC inflation dynamics stay irregular, with food rates the main source of upward pressure and inflation in this category fortifying in Kuwait, Oman and Qatar. By contrast, food inflation stays reasonably suppressed in Saudi Arabia, likely showing the mitigating result of its larger domestic food production base and higher supply-chain durability.

We continue to see price pressures as mainly temporal instead of indicative of a continual inflationary cycle. Appropriately, we expect average inflation to reduce to 2.1% y/y in 2027 as momentary supply-side pressures dissipate. With near-term inflation elevated and transit through the Strait likely set to resume gradually, we anticipate the US Federal Reserve to keep rate of interest on hold up until December, and local rate policies to follow suit.

We expect Iran's GDP to diminish by 10.8% this year (we anticipate a 9.4% contraction three months ago). Oil production and exports, which supply vital profits and FX inflows, have been reduced by the US marine blockade, while non-oil activity has actually been significantly hit. In Iraq, oil exports have collapsed to a drip 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 worldwide economy after more than a years of civil war. We expect GDP development to average 9.6% over 2026-2027, supported by renewed financial investment, particularly in banking and energy, monetary reforms, and the steady resuming of local trade links.

Driving Economic Growth through Global Diversification

The World Bank has actually slashed its 2026 growth forecast for Middle East economies, saying overall GDP development in the area is expected 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 infrastructure, had actually disrupted 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 Poverty Outlook anticipates that the area's aggregate (leaving out the Iran) GDP development will decelerate to 1.8 percent in 2026, down from 4.0 percent approximated for 2025. The 2026 projection has been devalued by 2.4 portion points since the January projections, reflecting the unfavorable results of the continuous conflict.

Saudi Arabia: Projection was devalued by 1.2 portion points considering that 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 among Gulf economies. United Arab Emirates: Growth forecast for the UAE has fallen by 2.7 portion points because January.

Qatar: Significantly, growth projection for the Qatari economy has actually seen a sharp decrease of 11.0 percentage points since January. The economy is now expected to record a contraction of 5.7%, down from an estimated development of 5.3%, due to severe blockage to melted gas supplies. Qatar is an essential gamer in the worldwide energy market, with an international market share of liquefied natural gas (LNG) materials varying in between 20% and 21%.

Kuwait relies totally (100%) on the Strait of Hormuz to export its petroleum and derivatives. Subsequently, closing the strait would mean a complete shutdown of the country's financial lifeline, right away stopping income inflows to the state budget. Bahrain: Growth forecast for Bahrain's economy has actually decreased by 1.8 percentage points because January.