Assessing GCC Market Resilience in 2026

Home costs have actually come under pressure after a period of strong growth, with current information from the Dubai Land Department showing a drop in mortgage transactions and cash sales. We believe the threat of a lasting migrant outflow and a serious recession in the genuine estate sector is low.

As a long lasting US-Iran deal takes shape, the fallout from the dispute has actually tightened up local financial conditions, exposing vulnerabilities through capital outflows, broader bond spreads, and weaker investor belief. Most GCC sovereigns carry fairly little financial obligation and funding dangers are for that reason restricted in the UAE, the central bank's liquidity management has actually alleviated instant issues.

That said, Bahrain has actually had the ability to count 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 very first offering from the area since the war began. High-frequency fiscal data highlight the stress on local public finances from the dispute.

ANSR July GCC PRs 50DR+

Key Stock Capital Strategies for GCC Growth

In Saudi Arabia, the deficit spending 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, reflecting contingency investments connected to the regional environment and an acceleration of Vision 2030 costs. In Qatar, the crisis brought oil and gas earnings to a halt, swelling the spending plan deficit to the biggest because 2017.

GCC inflation characteristics remain unequal, with food costs the primary source of upward pressure and inflation in this category fortifying in Kuwait, Oman and Qatar. By contrast, food inflation remains fairly controlled in Saudi Arabia, likely reflecting the mitigating result of its larger domestic food production base and greater supply-chain durability.

We continue to see rate pressures as largely transitory rather than a sign of a sustained inflationary cycle. Accordingly, we anticipate average inflation to alleviate to 2.1% y/y in 2027 as short-lived supply-side pressures dissipate. With near-term inflation raised and transit through the Strait most likely set to resume slowly, we anticipate the US Federal Reserve to keep rate of interest on hold until December, and local rate policies to do the same.

We expect Iran's GDP to shrink by 10.8% this year (we forecast a 9.4% contraction 3 months ago). Oil production and exports, which provide important revenue and FX inflows, have been curtailed by the United States naval blockade, while non-oil activity has actually 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 years of civil war. We prepare for GDP growth to average 9.6% over 2026-2027, supported by renewed financial investment, especially in banking and energy, financial reforms, and the progressive reopening of local trade links.

Navigating Capital Strategies for a 2026 Economy

The World Bank has actually slashed its 2026 development projection for Middle East economies, stating total GDP development 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 damage of energy and public infrastructure, had actually disrupted markets, increased monetary volatility, and damaged the 2026 growth 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 region's aggregate (excluding the Iran) GDP growth 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 percentage points since the January forecasts, reflecting the negative results of the ongoing conflict.

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

Qatar: Especially, growth forecast for the Qatari economy has seen a sharp decline of 11.0 percentage points since January. The economy is now anticipated to tape-record a contraction of 5.7%, down from an estimated development of 5.3%, due to serious blockage to melted gas products. Qatar is a crucial player in the global energy market, with an international 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 indicate a total shutdown of the nation's financial lifeline, right away stopping revenue inflows to the state spending plan. Bahrain: Growth forecast for Bahrain's economy has decreased by 1.8 portion points since January.