Key Capital Expansion in the Future

Home prices have actually come under pressure after a duration of strong growth, with current information from the Dubai Land Department revealing a drop in mortgage deals and cash sales. However, we believe the threat of an enduring migrant outflow and an extreme downturn in the property sector is low.

As an enduring US-Iran deal takes shape, the fallout from the dispute has actually tightened up local financial conditions, exposing vulnerabilities through capital outflows, larger bond spreads, and weaker investor sentiment. Most GCC sovereigns carry relatively little financial obligation and funding dangers are for that reason limited in the UAE, the reserve bank's liquidity management has actually minimized immediate issues.

That stated, Bahrain has had the ability 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 area considering that the war began. High-frequency financial data highlight the stress on regional public finances from the dispute.

ANSR July GCC PRs 50DR+

Optimizing Investment Strategies in a 2026 Economy

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 profits and a surge in spending, particularly on aids, showing contingency investments connected to the regional environment and an acceleration of Vision 2030 spending. In Qatar, the crisis brought oil and gas profits to a stop, swelling the budget plan deficit to the largest considering that 2017.

GCC inflation dynamics stay irregular, with food costs the main source of upward pressure and inflation in this category fortifying in Kuwait, Oman and Qatar. By contrast, food inflation stays fairly controlled in Saudi Arabia, likely reflecting the mitigating effect of its bigger domestic food production base and greater supply-chain durability.

We continue to see cost pressures as mainly temporal rather than indicative of a sustained inflationary cycle. Accordingly, we anticipate average inflation to reduce 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 expect the United States Federal Reserve to keep interest rates on hold till December, and regional rate policies to do the same.

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 essential revenue and FX inflows, have actually been curtailed by the United States naval blockade, while non-oil activity has been severely struck. In Iraq, oil exports have actually collapsed to a drip and we're anticipating GDP to contract 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 anticipate GDP growth to typical 9.6% over 2026-2027, supported by restored investment, particularly in banking and energy, financial reforms, and the steady reopening of regional trade links.

Top Foreign Capital Prospects for the GCC Market

The World Bank has slashed its 2026 development projection for Middle East economies, stating general GDP development 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 infrastructure, had actually disrupted markets, increased financial volatility, and weakened 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 Poverty Outlook forecasts that the area's aggregate (excluding the Iran) GDP growth will decrease to 1.8 percent in 2026, below 4.0 percent approximated for 2025. The 2026 projection has been reduced by 2.4 portion points considering that the January forecasts, reflecting the adverse effects of the continuous conflict.

Saudi Arabia: Projection was reduced by 1.2 portion points given that January. Growth is now anticipated 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 fallen by 2.7 percentage points given that January.

Qatar: Notably, growth projection for the Qatari economy has actually seen a sharp decline of 11.0 portion points since January. The economy is now expected to tape-record a contraction of 5.7%, down from an estimated growth of 5.3%, due to extreme obstruction to liquefied gas supplies. Qatar is a crucial player in the international energy market, with a worldwide market share of melted gas (LNG) products varying between 20% and 21%.

Kuwait relies entirely (100%) on the Strait of Hormuz to export its petroleum and derivatives. Subsequently, closing the strait would indicate a total shutdown of the nation's financial lifeline, right away halting profits inflows to the state budget. Bahrain: Development forecast for Bahrain's economy has declined by 1.8 percentage points given that January.