Securing Regional Portfolios against 2026 Shifts

Property costs have come under pressure after a period of strong growth, with recent information from the Dubai Land Department revealing a drop in mortgage deals and money sales. We believe the threat of a lasting migrant outflow and an extreme decline in the real estate sector is low.

As a long lasting US-Iran deal takes shape, the fallout from the dispute has tightened local financial conditions, exposing vulnerabilities through capital outflows, wider bond spreads, and weaker financier belief. The majority of GCC sovereigns carry relatively little financial obligation and funding risks are for that reason limited in the UAE, the reserve bank's liquidity management has eased immediate issues.

That stated, Bahrain has had the ability to rely on assistance 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 considering that the war started. High-frequency financial data highlight the stress on local public financial resources from the dispute.

ANSR July GCC PRs 50DR+

Key Equity Capital Strategies for Regional Investors

In Saudi Arabia, the budget plan deficit more than doubled to SAR125.7 bn, or about 9% of GDP in Q1, driven by a decline in oil revenue and a surge in spending, particularly on aids, showing contingency expenses connected to the local environment and an acceleration of Vision 2030 spending. In Qatar, the crisis brought oil and gas earnings to a stop, swelling the deficit spending to the largest because 2017.

GCC inflation characteristics remain unequal, with food prices the primary source of upward pressure and inflation in this category strengthening in Kuwait, Oman and Qatar. By contrast, food inflation stays reasonably subdued in Saudi Arabia, likely reflecting the mitigating impact of its bigger domestic food production base and higher supply-chain durability.

We continue to see price pressures as largely temporal instead of indicative of a sustained inflationary cycle. Appropriately, we anticipate typical inflation to ease 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 anticipate the United States Federal Reserve to keep rates of interest on hold till December, and regional rate policies to follow match.

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 supply essential revenue and FX inflows, have been reduced by the United States naval blockade, while non-oil activity has 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 global economy after more than a decade of civil war. We anticipate GDP growth to typical 9.6% over 2026-2027, supported by renewed investment, especially in banking and energy, monetary reforms, and the progressive resuming of regional trade links.

Future Business Climate in the GCC

The World Bank has actually slashed its 2026 growth forecast for Middle East economies, stating overall GDP development in the region 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 facilities, had actually interrupted markets, increased monetary volatility, and weakened 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 Hardship Outlook anticipates that the area's aggregate (excluding the Iran) GDP growth will slow down to 1.8 percent in 2026, below 4.0 percent estimated for 2025. The 2026 forecast has been downgraded by 2.4 portion points because the January projections, reflecting the unfavorable impacts of the ongoing dispute.

Saudi Arabia: Forecast was downgraded by 1.2 percentage points since January. Development 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 greatest amongst Gulf economies. United Arab Emirates: Growth projection for the UAE has actually fallen by 2.7 portion points given that January.

Qatar: Notably, development projection for the Qatari economy has seen a sharp decrease of 11.0 portion points because January. The economy is now expected to tape-record a contraction of 5.7%, below an approximated growth of 5.3%, due to severe blockage to melted gas supplies. Qatar is a crucial player in the international energy market, with a worldwide market share of melted gas (LNG) materials varying in between 20% and 21%.

Kuwait relies totally (100%) on the Strait of Hormuz to export its crude oil and derivatives. Closing the strait would indicate a complete shutdown of the nation's financial lifeline, immediately halting earnings inflows to the state spending plan. Bahrain: Development forecast for Bahrain's economy has actually declined by 1.8 portion points considering that January.