Key International Investment Prospects for the GCC Region

Property prices have come under pressure after a period of strong growth, with recent information from the Dubai Land Department showing a drop in home loan transactions and money sales. Nonetheless, we think the threat of a lasting migrant outflow and an extreme downturn in the realty sector is low.

As an enduring US-Iran offer takes shape, the fallout from the dispute has tightened up regional monetary conditions, exposing vulnerabilities through capital outflows, larger bond spreads, and weaker financier belief. A lot of GCC sovereigns carry fairly little debt and funding dangers are for that reason restricted in the UAE, the reserve bank's liquidity management has actually alleviated immediate concerns.

That said, Bahrain has actually had the ability to depend 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 first offering from the region since the war began. High-frequency financial information highlight the pressure on local public finances from the dispute.

ANSR July GCC PRs 50DR+

Future Investment Climate in the GCC

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 income and a surge in costs, particularly on aids, reflecting contingency investments connected to the local environment and an acceleration of Vision 2030 costs. In Qatar, the crisis brought oil and gas revenue to a stop, swelling the spending plan deficit to the biggest given that 2017.

GCC inflation dynamics stay irregular, with food costs the primary source of upward pressure and inflation in this classification conditioning in Kuwait, Oman and Qatar. By contrast, food inflation stays relatively controlled in Saudi Arabia, likely showing the mitigating effect of its larger domestic food production base and higher supply-chain durability.

We continue to view cost pressures as mostly temporal instead of a sign of a continual inflationary cycle. Accordingly, we anticipate typical inflation to reduce to 2.1% y/y in 2027 as temporary supply-side pressures dissipate. With near-term inflation raised and transit through the Strait most likely set to resume gradually, we anticipate the United States Federal Reserve to keep interest rates on hold up 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 vital revenue and FX inflows, have actually been cut by the US marine blockade, while non-oil activity has been seriously hit. In Iraq, oil exports have actually collapsed to a trickle and we're forecasting 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 years of civil war. We expect GDP growth to typical 9.6% over 2026-2027, supported by restored investment, especially in banking and energy, financial reforms, and the gradual reopening of regional trade links.

Critical Stock Market Insights for GCC Growth

The World Bank has actually slashed its 2026 development forecast for Middle East economies, stating total GDP growth in the region is expected 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 financial volatility, and damaged 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 Hardship Outlook anticipates that the area's aggregate (excluding the Iran) GDP growth will decelerate to 1.8 percent in 2026, below 4.0 percent estimated for 2025. The 2026 forecast has been reduced by 2.4 portion points considering that the January forecasts, reflecting the adverse results of the ongoing dispute.

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

Qatar: Significantly, growth forecast for the Qatari economy has seen a sharp decline of 11.0 percentage points given that January. The economy is now expected to record a contraction of 5.7%, down from an approximated growth of 5.3%, due to serious obstruction to melted gas materials. Qatar is an essential gamer in the international energy market, with an international market share of liquefied gas (LNG) products ranging between 20% and 21%.

Kuwait relies entirely (100%) on the Strait of Hormuz to export its petroleum and derivatives. Consequently, closing the strait would suggest a complete shutdown of the nation's financial lifeline, immediately stopping profits inflows to the state budget. Bahrain: Development projection for Bahrain's economy has decreased by 1.8 percentage points because January.