Key Foreign Investment Avenues for the GCC Region

Property costs have actually come under pressure after a period of strong growth, with recent information from the Dubai Land Department showing a drop in home mortgage transactions and cash sales. We believe the danger of an enduring migrant outflow and an extreme decline in the real estate sector is low.

As an enduring US-Iran deal takes shape, the fallout from the dispute has tightened up regional monetary conditions, exposing vulnerabilities through capital outflows, wider bond spreads, and weaker investor belief. Most GCC sovereigns bring fairly little financial obligation and financing threats are for that reason limited in the UAE, the reserve bank's liquidity management has relieved instant issues.

That said, Bahrain has actually been able to depend on support from neighbours, consisting of Saudi Arabia and the UAE, and it successfully raised $1bn from an oversubscribed sovereign bond sale this month, marking the first offering from the region given that the war began. High-frequency fiscal data underscore the stress on regional public finances from the conflict.

ANSR July GCC PRs 50DR+

Upcoming GCC Market Projections

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

GCC inflation characteristics stay uneven, with food costs the primary source of upward pressure and inflation in this classification fortifying in Kuwait, Oman and Qatar. By contrast, food inflation stays fairly controlled in Saudi Arabia, most likely showing the mitigating result of its bigger domestic food production base and greater supply-chain strength.

We continue to see rate pressures as largely transitory instead of a sign of a continual inflationary cycle. Accordingly, we expect typical inflation to alleviate to 2.1% y/y in 2027 as momentary 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 rates of interest on hold up 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 three months ago). Oil production and exports, which offer important earnings and FX inflows, have actually been cut by the US marine blockade, while non-oil activity has actually been seriously hit. In Iraq, oil exports have actually collapsed to a trickle and we're anticipating 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 prepare for GDP development to typical 9.6% over 2026-2027, supported by renewed financial investment, particularly in banking and energy, monetary reforms, and the progressive reopening of regional trade links.

The Future Investment Landscape in Arabia

The World Bank has slashed its 2026 growth projection for Middle East economies, stating overall GDP growth in the region is anticipated to slow from an approximated 3.6% in January to 1.8% for 2026. The closure of the tactical Strait of Hormuz, and destruction of energy and public infrastructure, had actually interfered with markets, increased financial volatility, and weakened 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 (excluding the Iran) GDP development will decrease to 1.8 percent in 2026, below 4.0 percent approximated for 2025. The 2026 projection has been downgraded by 2.4 percentage points given that the January projections, showing the unfavorable impacts of the continuous dispute.

Saudi Arabia: Projection was reduced by 1.2 portion points given that January. Growth is now expected to slow from 4.3% in 2025 to 3.1% in 2026, keeping in mind that Saudi Arabia's outlook stays the strongest amongst Gulf economies. United Arab Emirates: Growth projection for the UAE has actually fallen by 2.7 percentage points given 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%, below an approximated growth of 5.3%, due to severe obstruction to melted gas supplies. Qatar is a key player in the global energy market, with an international market share of liquefied gas (LNG) supplies 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 complete shutdown of the nation's financial lifeline, instantly halting profits inflows to the state budget plan. Bahrain: Growth projection for Bahrain's economy has actually decreased by 1.8 portion points because January.