Accelerating Industrial Success via Strategic Diversification

Home rates have come under pressure after a duration of strong growth, with recent information from the Dubai Land Department revealing a drop in home loan transactions and cash sales. We believe the risk of a lasting migrant outflow and an extreme decline in the genuine estate sector is low.

As a long lasting US-Iran offer takes shape, the fallout from the dispute has actually tightened regional financial conditions, exposing vulnerabilities through capital outflows, larger bond spreads, and weaker investor sentiment. A lot of GCC sovereigns carry fairly little financial obligation and financing dangers are for that reason limited in the UAE, the reserve bank's liquidity management has actually alleviated immediate concerns.

That said, Bahrain has been able to rely on support 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 region since the war started. High-frequency financial data underscore the stress on regional public financial resources from the dispute.

ANSR July GCC PRs 50DR+

Global Capital Prospects across the Middle East

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, reflecting contingency expenses connected to the regional environment and an acceleration of Vision 2030 spending. In Qatar, the crisis brought oil and gas revenue to a halt, swelling the deficit spending to the biggest since 2017.

GCC inflation characteristics stay uneven, with food prices the main source of upward pressure and inflation in this classification strengthening in Kuwait, Oman and Qatar. By contrast, food inflation stays relatively subdued in Saudi Arabia, likely showing the mitigating impact of its bigger domestic food production base and higher supply-chain durability.

We continue to view price pressures as largely transitory 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 likely set to resume slowly, we anticipate the US Federal Reserve to keep rate of interest on hold till December, and local rate policies to do the same.

We expect Iran's GDP to diminish by 10.8% this year (we forecast a 9.4% contraction three months ago). Oil production and exports, which provide necessary profits and FX inflows, have been cut by the United States marine blockade, while non-oil activity has been badly struck. In Iraq, oil exports have actually 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 years of civil war. We prepare for GDP growth to typical 9.6% over 2026-2027, supported by renewed financial investment, particularly in banking and energy, financial reforms, and the steady resuming of local trade links.

Future Regional Market Outlook

The World Bank has slashed its 2026 growth projection for Middle East economies, stating general GDP development in the region is expected to slow from an estimated 3.6% in January to 1.8% for 2026. The closure of the tactical Strait of Hormuz, and damage of energy and public facilities, had actually interfered with markets, increased monetary volatility, and compromised the 2026 development 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 region's aggregate (omitting the Iran) GDP growth will slow down to 1.8 percent in 2026, down from 4.0 percent approximated for 2025. The 2026 projection has been devalued by 2.4 portion points given that the January forecasts, showing the adverse effects of the ongoing conflict.

Saudi Arabia: Forecast was reduced by 1.2 portion points given that 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 portion points because January.

Qatar: Especially, development projection for the Qatari economy has actually seen a sharp decrease of 11.0 portion points since January. The economy is now expected to record a contraction of 5.7%, down from an approximated development of 5.3%, due to severe blockage to liquefied gas materials. Qatar is a key player in the global energy market, with a worldwide market share of liquefied gas (LNG) supplies varying in between 20% and 21%.

Kuwait relies totally (100%) on the Strait of Hormuz to export its petroleum and derivatives. Closing the strait would imply a total shutdown of the nation's financial lifeline, instantly stopping income inflows to the state budget. Bahrain: Development forecast for Bahrain's economy has actually decreased by 1.8 percentage points considering that January.