Key Equity Capital Insights for GCC Growth

Residential or commercial property rates have come under pressure after a period of strong growth, with recent data from the Dubai Land Department showing a drop in home loan deals and money sales. Nevertheless, we think the danger of a long lasting migrant outflow and an extreme downturn in the property sector is low.

As a lasting US-Iran offer takes shape, the fallout from the dispute has tightened local financial conditions, exposing vulnerabilities through capital outflows, wider bond spreads, and weaker investor belief. The majority of GCC sovereigns bring relatively little debt and funding risks are therefore restricted in the UAE, the main bank's liquidity management has actually reduced instant concerns.

That stated, Bahrain has had the ability to count on assistance 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 area since the war started. High-frequency fiscal information underscore the stress on local public finances from the dispute.

ANSR July GCC PRs 50DR+

Key Capital Diversification for the Future

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 income and a rise in spending, especially on aids, showing contingency expenses tied to the local environment and an acceleration of Vision 2030 costs. In Qatar, the crisis brought oil and gas income to a stop, swelling the spending plan deficit to the largest given that 2017.

GCC inflation dynamics remain 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 suppressed in Saudi Arabia, likely reflecting the mitigating effect of its larger domestic food production base and greater supply-chain resilience.

We continue to see rate pressures as largely temporal rather than a sign of a sustained 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 elevated and transit through the Strait most likely set to resume slowly, we expect the US Federal Reserve to keep rates of interest on hold up until December, and regional rate policies to follow suit.

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

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The World Bank has slashed its 2026 growth forecast for Middle East economies, saying total GDP growth 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 damage of energy and public infrastructure, had interfered with 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 Hardship Outlook forecasts that the area's aggregate (excluding the Iran) GDP development will slow down to 1.8 percent in 2026, below 4.0 percent approximated for 2025. The 2026 forecast has actually been downgraded by 2.4 portion points because the January forecasts, reflecting the unfavorable results of the continuous conflict.

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

Qatar: Significantly, development forecast for the Qatari economy has seen a sharp decrease of 11.0 percentage points because January. The economy is now expected to tape-record a contraction of 5.7%, below an estimated growth of 5.3%, due to extreme obstruction to melted gas products. Qatar is a key gamer in the international energy market, with a global market share of melted gas (LNG) supplies ranging between 20% and 21%.

Kuwait relies totally (100%) on the Strait of Hormuz to export its unrefined oil and derivatives. Consequently, closing the strait would imply a complete shutdown of the nation's monetary lifeline, right away halting earnings inflows to the state spending plan. Bahrain: Growth forecast for Bahrain's economy has declined by 1.8 percentage points because January.