Key Equity Market Insights for GCC Investors

Residential or commercial property costs have actually come under pressure after a period of strong development, with current information from the Dubai Land Department showing a drop in home loan transactions and money sales. We believe the risk of a lasting migrant outflow and a severe slump in the real estate sector is low.

As a long lasting US-Iran deal takes shape, the fallout from the dispute has actually tightened up regional financial conditions, exposing vulnerabilities through capital outflows, broader bond spreads, and weaker investor sentiment. Most GCC sovereigns carry relatively little debt and funding threats are for that reason restricted in the UAE, the central bank's liquidity management has actually relieved instant concerns.

That stated, Bahrain has been able to count on assistance from neighbours, including 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 began. High-frequency financial data underscore the pressure on regional public financial resources from the conflict.

ANSR July GCC PRs 50DR+

Top Foreign Capital Avenues in the GCC Market

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 income and a rise in costs, especially on subsidies, showing contingency outlays tied to the local environment and an acceleration of Vision 2030 costs. In Qatar, the crisis brought oil and gas income to a stop, swelling the deficit spending to the biggest because 2017.

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

We continue to view rate pressures as mostly transitory instead of a sign of a sustained inflationary cycle. Accordingly, we anticipate 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 likely set to resume gradually, we anticipate the US Federal Reserve to keep interest rates on hold till December, and local rate policies to follow fit.

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 essential earnings and FX inflows, have actually been reduced by the US naval blockade, while non-oil activity has actually been severely hit. In Iraq, oil exports have collapsed to a trickle and we're anticipating GDP to agreement 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 prepare for GDP growth to typical 9.6% over 2026-2027, supported by renewed financial investment, especially in banking and energy, financial reforms, and the steady reopening of regional trade links.

How Economic Shifts Can Transform Arabian Markets

The World Bank has slashed its 2026 development forecast for Middle East economies, stating general GDP growth in the area 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 damage of energy and public facilities, had actually interrupted markets, increased monetary volatility, and damaged 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 Hardship Outlook forecasts that the region's aggregate (leaving out the Iran) GDP development will decelerate to 1.8 percent in 2026, down from 4.0 percent estimated for 2025. The 2026 forecast has actually been devalued by 2.4 percentage points given that the January projections, reflecting the adverse impacts of the ongoing conflict.

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

Qatar: Notably, development forecast for the Qatari economy has seen a sharp decrease of 11.0 percentage points because January. The economy is now expected to tape a contraction of 5.7%, below an estimated development of 5.3%, due to extreme obstruction to liquefied gas supplies. Qatar is a crucial gamer in the global energy market, with a global market share of melted natural gas (LNG) products ranging between 20% and 21%.

Kuwait relies entirely (100%) on the Strait of Hormuz to export its unrefined oil and derivatives. Closing the strait would imply a total shutdown of the country's financial lifeline, immediately halting earnings inflows to the state budget. Bahrain: Growth projection for Bahrain's economy has declined by 1.8 percentage points since January.