Advancing Industrial Success through Strategic Diversification

Property costs have come under pressure after a duration of strong growth, with recent information from the Dubai Land Department revealing a drop in home mortgage deals and cash sales. We think the danger of a long lasting migrant outflow and an extreme slump in the genuine estate sector is low.

As a long lasting US-Iran deal takes shape, the fallout from the conflict has actually tightened local monetary conditions, exposing vulnerabilities through capital outflows, wider bond spreads, and weaker investor belief. Most GCC sovereigns carry fairly little financial obligation and financing dangers are therefore limited in the UAE, the central bank's liquidity management has actually alleviated immediate issues.

That stated, Bahrain has actually 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 since the war started. High-frequency fiscal information highlight the pressure on local public financial resources from the conflict.

ANSR July GCC PRs 50DR+

Essential Stock Market Insights for Regional Investors

In Saudi Arabia, the deficit spending 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 costs, particularly on aids, showing contingency investments connected to the regional environment and a velocity of Vision 2030 spending. In Qatar, the crisis brought oil and gas profits to a stop, swelling the spending plan deficit to the biggest since 2017.

GCC inflation characteristics stay unequal, with food rates the primary source of upward pressure and inflation in this classification fortifying in Kuwait, Oman and Qatar. By contrast, food inflation stays fairly suppressed in Saudi Arabia, likely showing the mitigating impact of its bigger domestic food production base and higher supply-chain resilience.

We continue to see cost pressures as largely temporal rather than indicative of a continual inflationary cycle. Appropriately, we anticipate average inflation to reduce to 2.1% y/y in 2027 as short-term supply-side pressures dissipate. With near-term inflation elevated and transit through the Strait most likely set to resume slowly, we anticipate the United States Federal Reserve to keep rate of interest on hold till December, and local rate policies to do the same.

We anticipate Iran's GDP to shrink by 10.8% this year (we anticipate a 9.4% contraction three months ago). Oil production and exports, which provide essential income and FX inflows, have been reduced by the US naval blockade, while non-oil activity has been significantly hit. In Iraq, oil exports have collapsed to a drip and we're anticipating 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 years of civil war. We anticipate GDP growth to average 9.6% over 2026-2027, supported by restored investment, particularly in banking and energy, financial reforms, and the gradual reopening of regional trade links.

Analyzing GCC Market Resilience in 2026

The World Bank has actually slashed its 2026 development forecast for Middle East economies, saying total GDP growth in the area 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 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 forecasts that the region's aggregate (excluding the Iran) GDP development will decelerate to 1.8 percent in 2026, below 4.0 percent estimated for 2025. The 2026 forecast has actually been reduced by 2.4 portion points because the January forecasts, reflecting the negative impacts of the continuous dispute.

Saudi Arabia: Projection was reduced by 1.2 percentage points considering that January. Development is now anticipated to slow from 4.3% in 2025 to 3.1% in 2026, noting that Saudi Arabia's outlook remains the greatest among Gulf economies. United Arab Emirates: Growth projection for the UAE has fallen by 2.7 percentage points since January.

Qatar: Especially, growth projection for the Qatari economy has actually seen a sharp decline of 11.0 percentage points since 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 liquefied gas products. Qatar is a crucial player in the global energy market, with a global market share of melted natural gas (LNG) products ranging between 20% and 21%.

Kuwait relies entirely (100%) on the Strait of Hormuz to export its petroleum and derivatives. Closing the strait would imply a total shutdown of the country's monetary lifeline, immediately halting income inflows to the state spending plan. Bahrain: Development forecast for Bahrain's economy has declined by 1.8 percentage points given that January.