Top Foreign Capital Avenues for the GCC Region

Home prices have actually come under pressure after a duration of strong development, with current data from the Dubai Land Department showing a drop in home loan deals and money sales. We believe the danger of a lasting migrant outflow and a severe decline in the genuine estate sector is low.

As an enduring US-Iran offer takes shape, the fallout from the conflict has tightened local monetary conditions, exposing vulnerabilities through capital outflows, larger bond spreads, and weaker financier sentiment. A lot of GCC sovereigns carry fairly little financial obligation and financing dangers are therefore limited in the UAE, the reserve bank's liquidity management has eased immediate issues.

That stated, Bahrain has actually had the ability to count on assistance from neighbours, consisting of Saudi Arabia and the UAE, and it successfully raised $1bn from an oversubscribed sovereign bond sale this month, marking the very first offering from the area since the war began. High-frequency financial data highlight the pressure on local public finances from the dispute.

ANSR July GCC PRs 50DR+

International Investment Prospects across the Middle East

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 revenue and a surge in costs, particularly on subsidies, reflecting contingency outlays connected 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 deficit spending to the biggest considering that 2017.

GCC inflation characteristics stay unequal, with food prices the main source of upward pressure and inflation in this classification fortifying in Kuwait, Oman and Qatar. By contrast, food inflation remains fairly subdued in Saudi Arabia, most likely reflecting the mitigating effect of its larger domestic food production base and greater supply-chain strength.

We continue to see price pressures as mostly temporal rather than a sign of a continual inflationary cycle. Accordingly, we expect typical inflation to relieve to 2.1% y/y in 2027 as short-lived supply-side pressures dissipate. With near-term inflation raised and transit through the Strait likely set to resume gradually, we anticipate the US Federal Reserve to keep interest rates on hold until 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 vital earnings and FX inflows, have actually been cut by the US naval blockade, while non-oil activity has actually been seriously struck. In Iraq, oil exports have actually 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 worldwide economy after more than a years of civil war. We anticipate GDP development to average 9.6% over 2026-2027, supported by restored investment, particularly in banking and energy, monetary reforms, and the gradual resuming of regional trade links.

Positioning Middle East Investments for 2026 Shifts

The World Bank has slashed its 2026 growth projection for Middle East economies, stating overall GDP development in the region is anticipated to slow from an estimated 3.6% in January to 1.8% for 2026. The closure of the tactical Strait of Hormuz, and destruction of energy and public facilities, had actually disrupted markets, increased financial volatility, and damaged the 2026 growth 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 anticipates that the area's aggregate (excluding the Iran) GDP growth will decrease to 1.8 percent in 2026, down from 4.0 percent estimated for 2025. The 2026 projection has actually been downgraded by 2.4 portion points considering that the January forecasts, reflecting the negative effects of the ongoing conflict.

Saudi Arabia: Forecast was reduced by 1.2 percentage points since January. Development 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 forecast for the UAE has actually fallen by 2.7 percentage points considering that January.

Qatar: Significantly, growth projection for the Qatari economy has seen a sharp decline of 11.0 percentage points considering that January. The economy is now anticipated to record a contraction of 5.7%, below an estimated development of 5.3%, due to serious blockage to melted gas products. Qatar is an essential gamer in the worldwide energy market, with an international market share of melted natural gas (LNG) materials varying in between 20% and 21%.

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