Strategic Economic Expansion in the Future

Residential or commercial property prices have actually come under pressure after a period of strong development, with current information from the Dubai Land Department showing a drop in home mortgage transactions and cash sales. We believe the threat of a long lasting migrant outflow and an extreme slump in the genuine estate sector is low.

As an enduring US-Iran offer takes shape, the fallout from the conflict has actually tightened up local financial conditions, exposing vulnerabilities through capital outflows, wider bond spreads, and weaker financier belief. The majority of GCC sovereigns bring relatively little financial obligation and financing threats are therefore restricted in the UAE, the reserve bank's liquidity management has eased instant issues.

That said, Bahrain has been able to depend 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 first offering from the region because the war began. High-frequency fiscal data underscore the pressure on local public financial resources from the dispute.

ANSR July GCC PRs 50DR+

Securing Regional Investments against 2026 Trends

In Saudi Arabia, the budget plan deficit more than doubled to SAR125.7 bn, or about 9% of GDP in Q1, driven by a decline in oil profits and a rise in costs, particularly on subsidies, showing contingency outlays connected to the regional environment and a velocity of Vision 2030 costs. In Qatar, the crisis brought oil and gas revenue to a halt, swelling the budget plan deficit to the largest given that 2017.

GCC inflation characteristics stay irregular, with food prices the main source of upward pressure and inflation in this category conditioning in Kuwait, Oman and Qatar. By contrast, food inflation stays relatively controlled in Saudi Arabia, likely showing the mitigating impact of its bigger domestic food production base and greater supply-chain durability.

We continue to view rate pressures as largely temporal rather than a sign of a continual inflationary cycle. Appropriately, we anticipate average inflation to ease to 2.1% y/y in 2027 as temporary supply-side pressures dissipate. With near-term inflation raised and transit through the Strait likely set to resume slowly, we anticipate the US Federal Reserve to keep rate of interest on hold until December, and local rate policies to follow match.

We expect Iran's GDP to shrink by 10.8% this year (we anticipate a 9.4% contraction three months ago). Oil production and exports, which provide vital revenue and FX inflows, have actually been reduced by the United States marine blockade, while non-oil activity has been seriously hit. In Iraq, oil exports have collapsed to a trickle 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 international economy after more than a years of civil war. We anticipate GDP development to typical 9.6% over 2026-2027, supported by restored investment, particularly in banking and energy, monetary reforms, and the progressive reopening of local trade links.

Advancing Industrial Growth via Global Diversification

The World Bank has actually slashed its 2026 development projection for Middle East economies, saying overall GDP development in the region 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 actually disrupted markets, increased monetary volatility, and compromised 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 region's aggregate (excluding the Iran) GDP development will decelerate to 1.8 percent in 2026, below 4.0 percent approximated for 2025. The 2026 forecast has actually been devalued by 2.4 portion points given that the January projections, reflecting the adverse impacts of the continuous dispute.

Saudi Arabia: Forecast was downgraded by 1.2 portion points considering that 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 stays the strongest amongst Gulf economies. United Arab Emirates: Growth forecast for the UAE has fallen by 2.7 percentage points given that January.

Qatar: Significantly, growth projection for the Qatari economy has seen a sharp decrease of 11.0 portion points considering that January. The economy is now anticipated to record a contraction of 5.7%, below an approximated growth of 5.3%, due to serious blockage to liquefied gas products. Qatar is a key player in the worldwide energy market, with a worldwide market share of melted natural gas (LNG) supplies ranging in between 20% and 21%.

Kuwait relies completely (100%) on the Strait of Hormuz to export its unrefined oil and derivatives. Consequently, closing the strait would suggest a total shutdown of the country's financial lifeline, right away halting earnings inflows to the state budget. Bahrain: Growth forecast for Bahrain's economy has declined by 1.8 percentage points given that January.