Evaluating Regional Investment Potential for 2026

Residential or commercial property costs have actually come under pressure after a duration of strong development, with current information from the Dubai Land Department showing a drop in home loan deals and cash sales. We think the threat of an enduring migrant outflow and a serious decline in the real estate sector is low.

As a long lasting US-Iran offer takes shape, the fallout from the conflict has actually tightened regional financial conditions, exposing vulnerabilities through capital outflows, broader bond spreads, and weaker financier belief. The majority of GCC sovereigns carry relatively little debt and funding dangers are therefore restricted in the UAE, the main bank's liquidity management has eased instant concerns.

That stated, Bahrain has actually had the ability to rely on support 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 region since the war began. High-frequency financial information underscore the pressure on regional public financial resources from the dispute.

ANSR July GCC PRs 50DR+

Assessing Regional Market Resilience for 2026

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

GCC inflation characteristics stay irregular, 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 relatively subdued in Saudi Arabia, most likely showing the mitigating effect of its bigger domestic food production base and higher supply-chain resilience.

We continue to view cost pressures as mostly transitory instead of a sign of a continual 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 expect the US Federal Reserve to keep rate of interest on hold until December, and regional rate policies to follow suit.

We expect Iran's GDP to shrink by 10.8% this year (we anticipate a 9.4% contraction 3 months ago). Oil production and exports, which offer essential earnings and FX inflows, have been curtailed by the US naval blockade, while non-oil activity has been severely hit. In Iraq, oil exports have actually collapsed to a trickle 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 international economy after more than a years of civil war. We prepare for GDP growth to average 9.6% over 2026-2027, supported by renewed financial investment, particularly in banking and energy, monetary reforms, and the progressive reopening of regional trade links.

Top Foreign Investment Prospects in the GCC Region

The World Bank has slashed its 2026 development forecast for Middle East economies, stating overall 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 destruction of energy and public infrastructure, had actually disrupted markets, increased financial volatility, and deteriorated the 2026 development 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 (omitting the Iran) GDP development will slow down to 1.8 percent in 2026, down from 4.0 percent approximated for 2025. The 2026 projection has actually been devalued by 2.4 percentage points given that the January projections, reflecting the negative impacts of the ongoing dispute.

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

Qatar: Significantly, growth forecast for the Qatari economy has seen a sharp decrease of 11.0 percentage points since January. The economy is now expected to tape a contraction of 5.7%, down from an estimated development of 5.3%, due to extreme blockage to liquefied gas products. Qatar is a crucial player in the international energy market, with an international market share of liquefied gas (LNG) products varying in between 20% and 21%.

Kuwait relies completely (100%) on the Strait of Hormuz to export its unrefined oil and derivatives. Closing the strait would suggest a total shutdown of the nation's monetary lifeline, right away halting revenue inflows to the state spending plan. Bahrain: Growth projection for Bahrain's economy has actually decreased by 1.8 percentage points given that January.