Driving Economic Success through Global Diversification

Property prices have come under pressure after a period of strong growth, with current information from the Dubai Land Department showing a drop in mortgage transactions and money sales. Nonetheless, 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 offer takes shape, the fallout from the dispute has actually tightened local financial conditions, exposing vulnerabilities through capital outflows, larger bond spreads, and weaker financier belief. The majority of GCC sovereigns carry reasonably little financial obligation and funding threats are therefore restricted in the UAE, the reserve bank's liquidity management has minimized instant issues.

That stated, Bahrain has actually been able to rely on assistance from neighbours, consisting of Saudi Arabia and the UAE, and it effectively raised $1bn from an oversubscribed sovereign bond sale this month, marking the first offering from the region since the war started. High-frequency financial data underscore the stress on regional public finances from the conflict.

ANSR July GCC PRs 50DR+

Accelerating Economic Growth through Strategic Diversification

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 revenue and a rise in spending, especially on subsidies, showing contingency outlays tied 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 stay uneven, with food costs the primary source of upward pressure and inflation in this category conditioning in Kuwait, Oman and Qatar. By contrast, food inflation remains relatively controlled in Saudi Arabia, most likely reflecting the mitigating result of its bigger domestic food production base and greater supply-chain resilience.

We continue to see rate pressures as mainly temporal instead of a sign of a continual inflationary cycle. Accordingly, we anticipate average 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 expect the United States Federal Reserve to keep interest rates on hold till December, and regional rate policies to follow match.

We expect 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 important revenue and FX inflows, have actually been reduced by the US marine blockade, while non-oil activity has been seriously struck. In Iraq, oil exports have actually collapsed to a drip and we're anticipating 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 prepare for GDP growth to typical 9.6% over 2026-2027, supported by renewed financial investment, particularly in banking and energy, monetary reforms, and the progressive resuming of local trade links.

Driving Industrial Growth via Global Diversification

The World Bank has slashed its 2026 development projection for Middle East economies, saying general GDP development in the region is expected to slow from an estimated 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 interrupted 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 (leaving out the Iran) GDP development will decrease to 1.8 percent in 2026, down from 4.0 percent approximated for 2025. The 2026 forecast has been reduced by 2.4 portion points since the January projections, showing the negative results of the continuous conflict.

Saudi Arabia: Projection was downgraded by 1.2 percentage points considering that 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 greatest amongst Gulf economies. United Arab Emirates: Growth projection for the UAE has fallen by 2.7 percentage points because January.

Qatar: Especially, growth forecast for the Qatari economy has actually seen a sharp decline of 11.0 portion points since January. The economy is now expected to record a contraction of 5.7%, down from an estimated growth of 5.3%, due to serious obstruction to liquefied gas products. Qatar is a key player in the worldwide energy market, with a global market share of melted natural gas (LNG) supplies ranging in between 20% and 21%.

Kuwait relies entirely (100%) on the Strait of Hormuz to export its petroleum and derivatives. Consequently, closing the strait would mean a total shutdown of the nation's financial lifeline, instantly stopping revenue inflows to the state spending plan. Bahrain: Development projection for Bahrain's economy has declined by 1.8 percentage points considering that January.