Top International Capital Prospects in the GCC Market

Home rates have actually come under pressure after a period of strong development, with recent information from the Dubai Land Department revealing a drop in mortgage deals and cash sales. We think the threat of an enduring migrant outflow and a serious slump in the real estate sector is low.

As a lasting US-Iran offer takes shape, the fallout from the dispute has actually tightened regional monetary conditions, exposing vulnerabilities through capital outflows, broader bond spreads, and weaker investor belief. Most GCC sovereigns carry relatively little financial obligation and financing dangers are therefore limited in the UAE, the reserve bank's liquidity management has actually reduced instant concerns.

That said, Bahrain has been able to rely on support from neighbours, including Saudi Arabia and the UAE, and it successfully raised $1bn from an oversubscribed sovereign bond sale this month, marking the first offering from the region considering that the war started. High-frequency financial data highlight the pressure on local public financial resources from the conflict.

ANSR July GCC PRs 50DR+

Future-Proofing GCC Portfolios against 2026 Shifts

In Saudi Arabia, the spending plan deficit more than doubled to SAR125.7 bn, or about 9% of GDP in Q1, driven by a decrease in oil income and a surge in spending, particularly on aids, showing contingency investments tied to the local environment and a velocity of Vision 2030 spending. In Qatar, the crisis brought oil and gas revenue to a stop, swelling the budget plan deficit to the largest because 2017.

GCC inflation characteristics remain irregular, with food costs the main source of upward pressure and inflation in this category 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 greater supply-chain durability.

We continue to view price pressures as mainly temporal rather than a sign of a continual 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 gradually, we expect the US Federal Reserve to keep interest rates on hold until December, and regional rate policies to do the same.

We anticipate Iran's GDP to shrink by 10.8% this year (we forecast a 9.4% contraction three months ago). Oil production and exports, which provide essential profits 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 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 global economy after more than a years of civil war. We prepare for GDP development to typical 9.6% over 2026-2027, supported by restored investment, particularly in banking and energy, financial reforms, and the steady reopening of regional trade links.

Positioning Middle East Investments for 2026 Shifts

The World Bank has actually slashed its 2026 growth projection for Middle East economies, saying overall GDP development in the region is expected to slow from an approximated 3.6% in January to 1.8% for 2026. The closure of the strategic Strait of Hormuz, and destruction of energy and public infrastructure, had actually interfered with markets, increased monetary volatility, and damaged 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 Hardship Outlook anticipates that the area's aggregate (leaving out the Iran) GDP development will slow down to 1.8 percent in 2026, below 4.0 percent approximated for 2025. The 2026 projection has actually been devalued by 2.4 percentage points given that the January forecasts, reflecting the negative effects of the continuous dispute.

Saudi Arabia: Forecast was downgraded by 1.2 percentage points because January. Growth 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: Growth forecast for the UAE has actually fallen by 2.7 portion points given that January.

Qatar: Significantly, development forecast for the Qatari economy has actually seen a sharp decrease of 11.0 percentage points because January. The economy is now expected to record a contraction of 5.7%, below an estimated development of 5.3%, due to extreme blockage to melted gas materials. Qatar is a crucial player in the international energy market, with a worldwide market share of melted natural gas (LNG) products ranging in between 20% and 21%.

Kuwait relies totally (100%) on the Strait of Hormuz to export its petroleum and derivatives. As a result, closing the strait would imply a total shutdown of the nation's financial lifeline, right away stopping revenue inflows to the state budget plan. Bahrain: Growth projection for Bahrain's economy has declined by 1.8 portion points considering that January.