Top International Capital Avenues for the GCC Market

Property costs have come under pressure after a duration of strong growth, with current data from the Dubai Land Department revealing a drop in mortgage deals and cash sales. We think the risk of a lasting migrant outflow and an extreme slump in the genuine estate sector is low.

As an enduring US-Iran deal takes shape, the fallout from the conflict has actually tightened up regional monetary conditions, exposing vulnerabilities through capital outflows, broader bond spreads, and weaker financier belief. A lot of GCC sovereigns carry relatively little debt and financing risks are for that reason limited in the UAE, the reserve bank's liquidity management has actually minimized instant concerns.

That stated, Bahrain has actually been able to depend on support 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 since the war started. High-frequency financial information underscore the stress on regional public financial resources from the conflict.

ANSR July GCC PRs 50DR+

Driving Economic Growth through Strategic Diversification

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 revenue and a surge in costs, particularly on subsidies, reflecting contingency outlays connected to the local environment and an acceleration of Vision 2030 spending. In Qatar, the crisis brought oil and gas earnings to a stop, swelling the budget deficit to the biggest because 2017.

GCC inflation characteristics remain unequal, with food costs the main source of upward pressure and inflation in this classification fortifying in Kuwait, Oman and Qatar. By contrast, food inflation stays fairly suppressed in Saudi Arabia, most likely reflecting the mitigating impact of its bigger domestic food production base and greater supply-chain strength.

We continue to see rate pressures as mostly temporal rather than indicative of a continual inflationary cycle. Accordingly, we expect average inflation to alleviate to 2.1% y/y in 2027 as short-lived supply-side pressures dissipate. With near-term inflation raised and transit through the Strait most likely set to resume slowly, we expect the United States Federal Reserve to keep interest rates on hold up until December, and regional rate policies to follow match.

We expect Iran's GDP to shrink by 10.8% this year (we anticipate a 9.4% contraction 3 months ago). Oil production and exports, which supply necessary profits and FX inflows, have actually been cut by the United States marine blockade, while non-oil activity has actually been significantly hit. In Iraq, oil exports have 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 international economy after more than a years of civil war. We anticipate GDP development to average 9.6% over 2026-2027, supported by renewed investment, especially in banking and energy, financial reforms, and the steady reopening of regional trade links.

Driving Economic Success via Global Diversification

The World Bank has actually 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 strategic Strait of Hormuz, and damage of energy and public facilities, had actually interfered with markets, increased financial volatility, and compromised the 2026 development outlook, the World Bank Group stated 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 (excluding the Iran) GDP development will slow down to 1.8 percent in 2026, down from 4.0 percent estimated for 2025. The 2026 projection has been reduced by 2.4 percentage points because the January forecasts, reflecting the negative impacts of the ongoing dispute.

Saudi Arabia: Projection was reduced by 1.2 portion points since 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 amongst Gulf economies. United Arab Emirates: Development forecast for the UAE has actually fallen by 2.7 portion points given that January.

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

Kuwait relies completely (100%) on the Strait of Hormuz to export its petroleum and derivatives. Closing the strait would mean a total shutdown of the country's monetary lifeline, instantly stopping income inflows to the state budget. Bahrain: Growth projection for Bahrain's economy has actually decreased by 1.8 percentage points because January.