Upcoming Middle Eastern Economic Forecasts

Home prices have actually come under pressure after a period of strong development, with recent information from the Dubai Land Department revealing a drop in home loan deals and money sales. We believe the threat of a long lasting migrant outflow and an extreme slump in the real estate sector is low.

As an enduring US-Iran deal takes shape, the fallout from the dispute has tightened regional financial conditions, exposing vulnerabilities through capital outflows, wider bond spreads, and weaker investor belief. A lot of GCC sovereigns bring reasonably little financial obligation and funding risks are for that reason restricted in the UAE, the reserve bank's liquidity management has actually minimized instant issues.

That said, Bahrain has actually 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 because the war began. High-frequency financial data underscore the pressure on local public financial resources from the conflict.

ANSR July GCC PRs 50DR+

Essential Equity Market Insights for GCC Growth

In Saudi Arabia, the deficit spending more than doubled to SAR125.7 bn, or about 9% of GDP in Q1, driven by a decrease in oil earnings and a rise in spending, especially on aids, reflecting contingency outlays tied to the local environment and a velocity of Vision 2030 spending. In Qatar, the crisis brought oil and gas earnings to a halt, swelling the deficit spending to the largest because 2017.

GCC inflation dynamics remain unequal, with food prices the main source of upward pressure and inflation in this category fortifying in Kuwait, Oman and Qatar. By contrast, food inflation stays relatively controlled in Saudi Arabia, likely showing the mitigating result of its bigger domestic food production base and higher supply-chain resilience.

We continue to see rate pressures as mostly transitory instead of indicative of a sustained inflationary cycle. Accordingly, we expect typical inflation to reduce to 2.1% y/y in 2027 as short-term supply-side pressures dissipate. With near-term inflation raised and transit through the Strait most likely set to resume slowly, we anticipate the US Federal Reserve to keep rate of interest on hold up until December, and regional rate policies to do the same.

We anticipate Iran's GDP to shrink by 10.8% this year (we anticipate a 9.4% contraction 3 months ago). Oil production and exports, which offer necessary profits and FX inflows, have been cut by the US naval blockade, while non-oil activity has actually been badly 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 worldwide economy after more than a decade of civil war. We anticipate GDP development to average 9.6% over 2026-2027, supported by renewed financial investment, especially in banking and energy, monetary reforms, and the progressive resuming of regional trade links.

Key Stock Capital Insights for Regional Investors

The World Bank has slashed its 2026 development forecast for Middle East economies, stating general GDP development in the region is anticipated to slow from an approximated 3.6% in January to 1.8% for 2026. The closure of the tactical Strait of Hormuz, and damage of energy and public facilities, had interfered with markets, increased monetary 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 area's aggregate (leaving out the Iran) GDP growth will decrease 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 given that the January projections, showing the adverse impacts of the continuous conflict.

Saudi Arabia: Projection was devalued by 1.2 percentage points given that January. Growth is now anticipated to slow from 4.3% in 2025 to 3.1% in 2026, noting that Saudi Arabia's outlook remains the greatest amongst Gulf economies. United Arab Emirates: Development projection for the UAE has fallen by 2.7 percentage points considering that January.

Qatar: Notably, development projection for the Qatari economy has actually seen a sharp decrease of 11.0 portion points since January. The economy is now anticipated to tape-record a contraction of 5.7%, down from an estimated growth of 5.3%, due to serious obstruction to melted gas products. Qatar is a crucial player in the global energy market, with an international market share of liquefied natural gas (LNG) materials ranging in between 20% and 21%.

Kuwait relies completely (100%) on the Strait of Hormuz to export its crude oil and derivatives. Closing the strait would indicate a total shutdown of the nation's monetary lifeline, immediately halting earnings inflows to the state spending plan. Bahrain: Development forecast for Bahrain's economy has declined by 1.8 portion points considering that January.