Upcoming Regional Financial Projections

Property rates have come under pressure after a duration of strong development, with recent data from the Dubai Land Department revealing a drop in mortgage transactions and cash sales. However, we think the risk of a long lasting migrant outflow and an extreme downturn in the realty sector is low.

As a long lasting US-Iran offer takes shape, the fallout from the conflict has actually tightened up local monetary conditions, exposing vulnerabilities through capital outflows, broader bond spreads, and weaker investor belief. The majority of GCC sovereigns carry relatively little financial obligation and financing threats are therefore limited in the UAE, the main bank's liquidity management has actually minimized instant concerns.

That stated, Bahrain has actually had the ability to count on assistance from neighbours, consisting of Saudi Arabia and the UAE, and it effectively raised $1bn from an oversubscribed sovereign bond sale this month, marking the very first offering from the region since the war started. High-frequency fiscal data highlight the strain on local public financial resources from the conflict.

ANSR July GCC PRs 50DR+

Positioning Middle East 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 revenue and a rise in costs, especially on subsidies, reflecting contingency investments tied to the local environment and an acceleration of Vision 2030 costs. In Qatar, the crisis brought oil and gas earnings to a halt, swelling the budget deficit to the biggest given that 2017.

GCC inflation characteristics remain uneven, with food prices the primary source of upward pressure and inflation in this category conditioning in Kuwait, Oman and Qatar. By contrast, food inflation stays relatively subdued in Saudi Arabia, most likely showing the mitigating impact of its larger domestic food production base and greater supply-chain durability.

We continue to see rate pressures as largely transitory instead of a sign of a sustained inflationary cycle. Appropriately, we expect typical inflation to alleviate to 2.1% y/y in 2027 as momentary supply-side pressures dissipate. With near-term inflation elevated and transit through the Strait likely set to resume slowly, we anticipate the United States Federal Reserve to keep rate of interest on hold until December, and local rate policies to follow fit.

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 necessary revenue and FX inflows, have been cut by the United States naval blockade, while non-oil activity has been significantly struck. In Iraq, oil exports have actually collapsed to a drip 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 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 gradual reopening of local trade links.

Future GCC Market Outlook

The World Bank has slashed its 2026 growth forecast for Middle East economies, saying 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 disrupted markets, increased monetary volatility, and deteriorated 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 (excluding the Iran) GDP development will decrease to 1.8 percent in 2026, below 4.0 percent estimated for 2025. The 2026 projection has been downgraded by 2.4 percentage points because the January forecasts, reflecting the negative impacts of the continuous dispute.

Saudi Arabia: Forecast was reduced by 1.2 portion points because January. Growth is now anticipated to slow from 4.3% in 2025 to 3.1% in 2026, keeping in mind that Saudi Arabia's outlook remains the greatest among Gulf economies. United Arab Emirates: Development projection for the UAE has actually fallen by 2.7 percentage points because January.

Qatar: Significantly, development forecast for the Qatari economy has actually seen a sharp decrease of 11.0 portion points since January. The economy is now expected to record a contraction of 5.7%, below an estimated development of 5.3%, due to extreme obstruction to melted gas products. Qatar is an essential player in the international energy market, with an international market share of liquefied natural gas (LNG) materials varying in 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 complete shutdown of the country's monetary lifeline, immediately stopping revenue inflows to the state budget plan. Bahrain: Growth projection for Bahrain's economy has actually declined by 1.8 percentage points because January.