Analyzing Regional Market Potential in 2026

Property rates have come under pressure after a period of strong development, with current information from the Dubai Land Department revealing a drop in home mortgage deals and cash sales. We believe the risk of an enduring migrant outflow and a severe slump in the real estate sector is low.

As a long lasting US-Iran deal takes shape, the fallout from the dispute has actually tightened up regional monetary conditions, exposing vulnerabilities through capital outflows, broader bond spreads, and weaker investor belief. Most GCC sovereigns carry fairly little financial obligation and funding threats are for that reason limited in the UAE, the main bank's liquidity management has eased instant issues.

That said, Bahrain has actually had the ability to count 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 because the war started. High-frequency financial information underscore the strain on regional public finances from the dispute.

ANSR July GCC PRs 50DR+

Future Middle Eastern Market Forecasts

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

GCC inflation characteristics remain uneven, with food costs the main source of upward pressure and inflation in this category fortifying in Kuwait, Oman and Qatar. By contrast, food inflation remains relatively controlled in Saudi Arabia, most likely showing the mitigating effect of its larger domestic food production base and higher supply-chain strength.

We continue to view cost pressures as largely temporal instead of a sign of a sustained inflationary cycle. Accordingly, we anticipate average inflation to reduce to 2.1% y/y in 2027 as short-lived supply-side pressures dissipate. With near-term inflation elevated and transit through the Strait most likely set to resume gradually, we expect the United States Federal Reserve to keep rates of interest on hold till December, and local rate policies to do the same.

We anticipate Iran's GDP to diminish by 10.8% this year (we anticipate a 9.4% contraction three months ago). Oil production and exports, which supply essential profits and FX inflows, have been curtailed by the US marine blockade, while non-oil activity has actually been significantly hit. 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 global economy after more than a years of civil war. We expect GDP growth to average 9.6% over 2026-2027, supported by restored investment, particularly in banking and energy, financial reforms, and the progressive reopening of regional trade links.

Securing Middle East Portfolios against 2026 Shifts

The World Bank has slashed its 2026 growth projection for Middle East economies, stating overall GDP development in the area is expected 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 infrastructure, had interrupted markets, increased monetary 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 Hardship Outlook forecasts that the region's aggregate (omitting the Iran) GDP development will decelerate to 1.8 percent in 2026, below 4.0 percent estimated for 2025. The 2026 projection has been downgraded by 2.4 portion points considering that the January projections, reflecting the negative results of the continuous dispute.

Saudi Arabia: Forecast was reduced by 1.2 percentage points because January. Growth is now anticipated to slow from 4.3% in 2025 to 3.1% in 2026, keeping in mind that Saudi Arabia's outlook stays the strongest among Gulf economies. United Arab Emirates: Development projection for the UAE has actually fallen by 2.7 percentage points because January.

Qatar: Especially, development projection for the Qatari economy has actually seen a sharp decline of 11.0 portion points because January. The economy is now anticipated to tape-record a contraction of 5.7%, down from an estimated development of 5.3%, due to extreme blockage to liquefied gas products. Qatar is a key gamer in the worldwide energy market, with a worldwide market share of liquefied natural gas (LNG) materials varying between 20% and 21%.

Kuwait relies completely (100%) on the Strait of Hormuz to export its petroleum and derivatives. Subsequently, closing the strait would mean a complete shutdown of the nation's financial lifeline, immediately halting income inflows to the state budget. Bahrain: Growth projection for Bahrain's economy has declined by 1.8 percentage points considering that January.