Emerging Equity Market Trends for 2026

Property prices have come under pressure after a period of strong growth, with current information from the Dubai Land Department showing a drop in home mortgage deals and cash sales. Nonetheless, we think the threat of an enduring migrant outflow and an extreme recession in the property sector is low.

As a long lasting US-Iran deal takes shape, the fallout from the dispute has tightened local financial conditions, exposing vulnerabilities through capital outflows, broader bond spreads, and weaker investor sentiment. The majority of GCC sovereigns bring reasonably little debt and funding threats are therefore restricted in the UAE, the reserve bank's liquidity management has eased immediate issues.

That stated, Bahrain has actually had the ability 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 very first offering from the region because the war started. High-frequency fiscal data highlight the stress on regional public financial resources from the conflict.

ANSR July GCC PRs 50DR+

Foreign Capital Opportunities across the GCC

In Saudi Arabia, the budget 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, showing contingency investments connected to the regional environment and an acceleration of Vision 2030 spending. In Qatar, the crisis brought oil and gas revenue to a stop, swelling the deficit spending to the biggest given that 2017.

GCC inflation dynamics remain unequal, with food prices the main source of upward pressure and inflation in this category strengthening in Kuwait, Oman and Qatar. By contrast, food inflation remains fairly suppressed in Saudi Arabia, likely reflecting the mitigating effect of its bigger domestic food production base and greater supply-chain strength.

We continue to see rate pressures as mostly temporal instead of a sign of a sustained inflationary cycle. Appropriately, we expect average 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 anticipate the US Federal Reserve to keep rates of interest on hold up until December, and regional rate policies to do the same.

We expect Iran's GDP to shrink by 10.8% this year (we forecast a 9.4% contraction three months ago). Oil production and exports, which offer essential profits and FX inflows, have actually been curtailed by the United States naval blockade, while non-oil activity has actually been seriously hit. In Iraq, oil exports have collapsed to a drip 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 prepare for GDP development to average 9.6% over 2026-2027, supported by renewed financial investment, particularly in banking and energy, monetary 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, stating general GDP development 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 destruction of energy and public infrastructure, had actually interrupted markets, increased monetary volatility, and weakened 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 anticipates that the region's aggregate (leaving out the Iran) GDP development will slow down to 1.8 percent in 2026, down from 4.0 percent estimated for 2025. The 2026 forecast has actually been downgraded by 2.4 portion points because the January forecasts, reflecting the negative effects of the ongoing conflict.

Saudi Arabia: Forecast was devalued by 1.2 portion points since January. Development 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: Growth projection for the UAE has actually fallen by 2.7 portion points considering that January.

Qatar: Notably, development projection for the Qatari economy has seen a sharp decrease of 11.0 percentage points considering that January. The economy is now expected to record a contraction of 5.7%, below an estimated development of 5.3%, due to severe obstruction to liquefied gas products. Qatar is a key player in the worldwide energy market, with a global market share of liquefied gas (LNG) supplies ranging in between 20% and 21%.

Kuwait relies entirely (100%) on the Strait of Hormuz to export its petroleum and derivatives. Closing the strait would imply a total shutdown of the country's monetary lifeline, right away halting income inflows to the state budget plan. Bahrain: Growth projection for Bahrain's economy has actually decreased by 1.8 percentage points considering that January.