Optimizing Capital Strategies for a Global Economy

Residential or commercial property costs have actually come under pressure after a duration of strong development, with current information from the Dubai Land Department revealing a drop in mortgage deals and cash sales. We believe the risk of a lasting migrant outflow and a serious decline in the real estate sector is low.

As a lasting US-Iran deal takes shape, the fallout from the conflict has actually tightened local financial conditions, exposing vulnerabilities through capital outflows, larger bond spreads, and weaker financier sentiment. A lot of GCC sovereigns carry fairly little debt and funding dangers are therefore restricted in the UAE, the main bank's liquidity management has reduced instant issues.

That stated, Bahrain has actually been able to depend on support 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 because the war started. High-frequency financial data highlight the stress on regional public financial resources from the conflict.

ANSR July GCC PRs 50DR+

2026 GCC Market Forecasts

In Saudi Arabia, the spending plan deficit more than doubled to SAR125.7 bn, or about 9% of GDP in Q1, driven by a decline in oil profits and a rise in costs, especially on aids, showing contingency investments tied to the local environment and an acceleration of Vision 2030 costs. In Qatar, the crisis brought oil and gas revenue to a halt, swelling the deficit spending to the largest because 2017.

GCC inflation characteristics remain 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 reasonably suppressed in Saudi Arabia, likely reflecting the mitigating effect of its bigger domestic food production base and greater supply-chain resilience.

We continue to see price pressures as largely transitory instead of indicative of a sustained inflationary cycle. Accordingly, we expect average inflation to ease to 2.1% y/y in 2027 as temporary supply-side pressures dissipate. With near-term inflation raised and transit through the Strait likely set to resume slowly, we anticipate the US Federal Reserve to keep rates of interest on hold until December, and regional rate policies to follow fit.

We anticipate Iran's GDP to shrink by 10.8% this year (we forecast a 9.4% contraction 3 months ago). Oil production and exports, which offer important earnings and FX inflows, have been cut by the US marine blockade, while non-oil activity has been significantly struck. In Iraq, oil exports have collapsed to a drip 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 worldwide economy after more than a decade of civil war. We expect GDP development to typical 9.6% over 2026-2027, supported by renewed investment, particularly in banking and energy, financial reforms, and the gradual resuming of regional trade links.

Advancing Non-Oil Growth through Global Diversification

The World Bank has slashed its 2026 growth projection for Middle East economies, saying general GDP growth in the area is anticipated to slow from an approximated 3.6% in January to 1.8% for 2026. The closure of the strategic Strait of Hormuz, and destruction of energy and public facilities, had interrupted markets, increased financial volatility, and compromised 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 area's aggregate (excluding the Iran) GDP development will slow down to 1.8 percent in 2026, down from 4.0 percent approximated for 2025. The 2026 forecast has been downgraded by 2.4 percentage points because the January projections, showing the negative impacts of the continuous conflict.

Saudi Arabia: Forecast was downgraded by 1.2 portion points considering that January. Growth is now anticipated to slow from 4.3% in 2025 to 3.1% in 2026, noting that Saudi Arabia's outlook remains the strongest amongst Gulf economies. United Arab Emirates: Development forecast for the UAE has fallen by 2.7 percentage points given that January.

Qatar: Significantly, development projection for the Qatari economy has seen a sharp decline of 11.0 portion points given that January. The economy is now expected to record a contraction of 5.7%, below an approximated growth of 5.3%, due to extreme blockage to liquefied gas materials. Qatar is a key player in the international energy market, with a worldwide market share of melted gas (LNG) products ranging between 20% and 21%.

Kuwait relies totally (100%) on the Strait of Hormuz to export its petroleum and derivatives. Closing the strait would suggest a complete shutdown of the nation's monetary lifeline, right away halting earnings inflows to the state budget plan. Bahrain: Development projection for Bahrain's economy has declined by 1.8 percentage points since January.