Key Stock Market Strategies for Regional Growth

Property prices have come under pressure after a period of strong growth, with recent data from the Dubai Land Department revealing a drop in mortgage transactions and cash sales. We believe the danger of an enduring migrant outflow and a serious slump in the real estate sector is low.

As a lasting US-Iran offer takes shape, the fallout from the dispute has actually tightened local monetary conditions, exposing vulnerabilities through capital outflows, wider bond spreads, and weaker financier belief. Most GCC sovereigns carry relatively little financial obligation and funding risks are therefore restricted in the UAE, the main bank's liquidity management has alleviated instant concerns.

That stated, Bahrain has actually had the ability 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 first offering from the area given that the war started. High-frequency financial data highlight the stress on local public finances from the dispute.

ANSR July GCC PRs 50DR+

How Industrial Diversification Can Shape Arabian Markets

In Saudi Arabia, the budget deficit more than doubled to SAR125.7 bn, or about 9% of GDP in Q1, driven by a decrease in oil profits and a rise in spending, especially on subsidies, showing contingency investments tied to the local environment and a velocity of Vision 2030 spending. In Qatar, the crisis brought oil and gas earnings to a stop, swelling the budget plan deficit to the largest considering that 2017.

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

We continue to see price pressures as mainly temporal rather than indicative of a sustained inflationary cycle. Accordingly, we expect typical inflation to reduce to 2.1% y/y in 2027 as temporary supply-side pressures dissipate. With near-term inflation raised and transit through the Strait most likely set to resume gradually, we anticipate the United States Federal Reserve to keep rates of interest on hold until 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 supply important earnings and FX inflows, have actually been reduced by the US naval blockade, while non-oil activity has been seriously hit. In Iraq, oil exports have actually collapsed to a trickle and we're forecasting 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 global economy after more than a years of civil war. We anticipate GDP development to typical 9.6% over 2026-2027, supported by renewed investment, particularly in banking and energy, monetary reforms, and the gradual reopening of local trade links.

Future Business Climate of the GCC

The World Bank has actually slashed its 2026 development forecast for Middle East economies, saying general 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 destruction of energy and public infrastructure, had actually disrupted markets, increased financial volatility, and damaged 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 Hardship Outlook forecasts that the region's aggregate (leaving out the Iran) GDP growth will decrease to 1.8 percent in 2026, below 4.0 percent approximated for 2025. The 2026 forecast has actually been downgraded by 2.4 portion points considering that the January projections, showing the unfavorable effects of the ongoing dispute.

Saudi Arabia: Projection was devalued by 1.2 portion points given 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 greatest amongst Gulf economies. United Arab Emirates: Development projection for the UAE has fallen by 2.7 portion points since January.

Qatar: Significantly, growth forecast for the Qatari economy has actually seen a sharp decline of 11.0 percentage points since January. The economy is now anticipated to tape a contraction of 5.7%, down from an approximated development of 5.3%, due to extreme blockage to melted gas products. Qatar is a crucial player in the global energy market, with a global market share of liquefied natural gas (LNG) supplies ranging in between 20% and 21%.

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