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Residential or commercial property rates have come under pressure after a duration of strong growth, with current data from the Dubai Land Department showing a drop in home loan deals and cash sales. Nonetheless, we believe the danger of a long lasting migrant outflow and a serious slump in the real estate sector is low.

As a long lasting US-Iran offer takes shape, the fallout from the dispute has actually tightened up local monetary conditions, exposing vulnerabilities through capital outflows, broader bond spreads, and weaker investor belief. The majority of GCC sovereigns bring relatively little financial obligation and financing risks are for that reason restricted in the UAE, the reserve bank's liquidity management has actually reduced immediate concerns.

That said, Bahrain has had the ability 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 area since the war started. High-frequency financial data highlight the pressure on local public financial resources from the dispute.

ANSR July GCC PRs 50DR+

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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 income and a rise in costs, particularly on subsidies, reflecting contingency investments connected to the local environment and a velocity of Vision 2030 costs. In Qatar, the crisis brought oil and gas revenue to a stop, swelling the budget deficit to the largest considering that 2017.

GCC inflation characteristics stay unequal, with food costs the main source of upward pressure and inflation in this category fortifying in Kuwait, Oman and Qatar. By contrast, food inflation stays reasonably controlled in Saudi Arabia, likely reflecting the mitigating impact of its bigger domestic food production base and greater supply-chain resilience.

We continue to see price pressures as mainly temporal instead of a sign of a continual inflationary cycle. Appropriately, we anticipate typical inflation to reduce to 2.1% y/y in 2027 as short-term supply-side pressures dissipate. With near-term inflation elevated and transit through the Strait most likely set to resume gradually, we expect the United States Federal Reserve to keep rates of interest on hold till December, and local rate policies to follow suit.

We expect Iran's GDP to diminish by 10.8% this year (we anticipate a 9.4% contraction 3 months ago). Oil production and exports, which offer essential earnings and FX inflows, have been reduced by the US naval blockade, while non-oil activity has been severely 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 global economy after more than a decade of civil war. We expect GDP development to typical 9.6% over 2026-2027, supported by restored financial investment, especially in banking and energy, financial reforms, and the gradual resuming of local trade links.

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The World Bank has slashed its 2026 development projection for Middle East economies, saying 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 infrastructure, had interfered with markets, increased monetary volatility, and compromised the 2026 growth 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 forecasts that the area's aggregate (excluding the Iran) GDP growth will slow down to 1.8 percent in 2026, below 4.0 percent estimated for 2025. The 2026 projection has been reduced by 2.4 percentage points given that the January projections, showing the negative impacts of the continuous dispute.

Saudi Arabia: Projection was downgraded by 1.2 percentage points because January. Development is now expected 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 considering that January.

Qatar: Especially, development forecast for the Qatari economy has seen a sharp decrease of 11.0 portion points considering that January. The economy is now expected to tape a contraction of 5.7%, below an approximated growth of 5.3%, due to severe obstruction to liquefied gas supplies. Qatar is a crucial gamer in the international energy market, with a worldwide market share of liquefied natural gas (LNG) supplies ranging between 20% and 21%.

Kuwait relies completely (100%) on the Strait of Hormuz to export its crude oil and derivatives. Subsequently, closing the strait would indicate a total shutdown of the country's financial lifeline, instantly stopping profits inflows to the state budget plan. Bahrain: Growth forecast for Bahrain's economy has decreased by 1.8 percentage points because January.