Navigating Investment Strategies in a 2026 Economy

Property costs have come under pressure after a period of strong growth, with recent information from the Dubai Land Department revealing a drop in mortgage transactions and money sales. However, we think the threat of a long lasting migrant outflow and a severe downturn in the property sector is low.

As a long lasting US-Iran offer takes shape, the fallout from the conflict has tightened local monetary conditions, exposing vulnerabilities through capital outflows, broader bond spreads, and weaker investor belief. Many GCC sovereigns carry fairly little financial obligation and financing risks are for that reason restricted in the UAE, the main bank's liquidity management has eased immediate concerns.

That stated, Bahrain has been able to depend on assistance from neighbours, consisting of 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 fiscal data underscore the pressure on regional public financial resources from the conflict.

ANSR July GCC PRs 50DR+

Analyzing Regional Market Resilience in 2026

In Saudi Arabia, the budget plan deficit more than doubled to SAR125.7 bn, or about 9% of GDP in Q1, driven by a decrease in oil profits and a surge in costs, particularly on subsidies, reflecting contingency expenses connected to the regional 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 largest because 2017.

GCC inflation characteristics remain 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 remains relatively suppressed in Saudi Arabia, likely reflecting the mitigating impact of its bigger domestic food production base and greater supply-chain durability.

We continue to see cost pressures as mostly temporal rather than a sign of a sustained inflationary cycle. Accordingly, we expect typical inflation to relieve to 2.1% y/y in 2027 as short-lived 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 rate of interest on hold until December, and regional rate policies to follow suit.

We anticipate Iran's GDP to shrink by 10.8% this year (we forecast a 9.4% contraction 3 months ago). Oil production and exports, which offer important income and FX inflows, have actually been cut by the US naval 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 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 global economy after more than a years of civil war. We expect GDP development to average 9.6% over 2026-2027, supported by renewed investment, especially in banking and energy, financial reforms, and the gradual reopening of regional trade links.

Future Regional Financial Projections

The World Bank has actually slashed its 2026 growth projection for Middle East economies, saying total GDP development in the area is expected to slow from an estimated 3.6% in January to 1.8% for 2026. The closure of the strategic Strait of Hormuz, and damage of energy and public facilities, had interfered with 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 Poverty Outlook forecasts that the region's aggregate (leaving out the Iran) GDP growth will slow down to 1.8 percent in 2026, down from 4.0 percent estimated for 2025. The 2026 forecast has actually been devalued by 2.4 portion points because the January projections, showing the adverse results of the ongoing conflict.

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

Qatar: Notably, growth projection for the Qatari economy has seen a sharp decrease of 11.0 percentage points because January. The economy is now expected to tape-record a contraction of 5.7%, below an approximated development of 5.3%, due to severe blockage to melted gas materials. Qatar is an essential player in the global energy market, with a worldwide market share of liquefied gas (LNG) materials varying in between 20% and 21%.

Kuwait relies completely (100%) on the Strait of Hormuz to export its petroleum and derivatives. Subsequently, closing the strait would suggest a total shutdown of the nation's monetary lifeline, right away halting revenue inflows to the state budget. Bahrain: Growth forecast for Bahrain's economy has actually decreased by 1.8 portion points given that January.