Navigating Investment Strategies in a Global Economy

Property rates have come under pressure after a period of strong development, with recent information from the Dubai Land Department showing a drop in mortgage transactions and cash sales. We think the risk of a long lasting migrant outflow and a serious recession in the real estate sector is low.

As an enduring US-Iran offer takes shape, the fallout from the dispute has tightened up regional monetary conditions, exposing vulnerabilities through capital outflows, wider bond spreads, and weaker investor sentiment. Most GCC sovereigns carry reasonably little financial obligation and funding threats are for that reason limited in the UAE, the central bank's liquidity management has actually minimized immediate concerns.

That stated, Bahrain has had the ability to count on assistance from neighbours, including 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 information underscore the stress on regional public finances from the conflict.

ANSR July GCC PRs 50DR+

How Economic Shifts Will Shape GCC Markets

In Saudi Arabia, the spending plan deficit more than doubled to SAR125.7 bn, or about 9% of GDP in Q1, driven by a decrease in oil income and a surge in spending, especially on aids, showing contingency investments tied to the local environment and a velocity of Vision 2030 costs. In Qatar, the crisis brought oil and gas income to a halt, swelling the budget plan deficit to the biggest because 2017.

GCC inflation characteristics stay irregular, with food rates the main source of upward pressure and inflation in this classification conditioning in Kuwait, Oman and Qatar. By contrast, food inflation remains reasonably suppressed in Saudi Arabia, most likely showing the mitigating impact of its bigger domestic food production base and greater supply-chain durability.

We continue to view cost pressures as mainly transitory instead of indicative of a continual inflationary cycle. Appropriately, we expect average inflation to ease to 2.1% y/y in 2027 as short-lived supply-side pressures dissipate. With near-term inflation elevated and transit through the Strait most likely set to resume slowly, we anticipate the US Federal Reserve to keep interest rates on hold until December, and local 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 necessary profits and FX inflows, have actually been curtailed by the United States naval blockade, while non-oil activity has actually been severely struck. In Iraq, oil exports have 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 worldwide economy after more than a decade of civil war. We prepare for GDP development to average 9.6% over 2026-2027, supported by renewed financial investment, especially in banking and energy, monetary reforms, and the gradual reopening of local trade links.

Driving Economic Success through Strategic Diversification

The World Bank has slashed its 2026 growth forecast for Middle East economies, stating overall GDP growth in the region 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 facilities, had actually disrupted markets, increased financial volatility, and compromised the 2026 growth 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 anticipates that the area's aggregate (excluding the Iran) GDP development will slow down to 1.8 percent in 2026, down from 4.0 percent approximated for 2025. The 2026 forecast has actually been devalued by 2.4 portion points considering that the January projections, reflecting the adverse results of the ongoing conflict.

Saudi Arabia: Projection was downgraded by 1.2 portion points because 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 forecast for the UAE has fallen by 2.7 portion points because January.

Qatar: Especially, growth projection for the Qatari economy has actually seen a sharp decrease of 11.0 portion points because January. The economy is now anticipated to tape a contraction of 5.7%, below an approximated development of 5.3%, due to severe blockage to liquefied gas products. Qatar is a key player in the international energy market, with a worldwide market share of liquefied natural gas (LNG) supplies ranging 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 country's financial lifeline, instantly stopping income inflows to the state budget plan. Bahrain: Growth forecast for Bahrain's economy has actually decreased by 1.8 percentage points considering that January.