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Property rates have come under pressure after a duration of strong development, with current information from the Dubai Land Department revealing a drop in mortgage transactions and cash sales. However, we believe the threat of a lasting migrant outflow and a serious decline in the property sector is low.

As a long lasting US-Iran offer takes shape, the fallout from the dispute has actually tightened regional monetary conditions, exposing vulnerabilities through capital outflows, broader bond spreads, and weaker investor sentiment. Many GCC sovereigns bring reasonably little financial obligation and funding risks are for that reason limited in the UAE, the central bank's liquidity management has eased immediate concerns.

That said, Bahrain has actually been able to depend 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 very first offering from the region considering that the war started. High-frequency fiscal information underscore the stress on regional public financial resources from the conflict.

ANSR July GCC PRs 50DR+

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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 surge in spending, particularly on aids, reflecting contingency expenses connected to the regional environment and an acceleration of Vision 2030 spending. In Qatar, the crisis brought oil and gas income to a stop, swelling the deficit spending to the largest considering that 2017.

GCC inflation characteristics remain irregular, with food costs the primary source of upward pressure and inflation in this classification conditioning in Kuwait, Oman and Qatar. By contrast, food inflation remains fairly subdued in Saudi Arabia, likely reflecting the mitigating result of its bigger domestic food production base and greater supply-chain resilience.

We continue to view cost pressures as largely temporal instead of indicative of a sustained inflationary cycle. Appropriately, we anticipate typical 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 likely set to resume gradually, we anticipate the US Federal Reserve to keep rate of interest on hold up until December, and local rate policies to follow fit.

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 provide vital profits and FX inflows, have actually been cut by the US marine blockade, while non-oil activity has been significantly hit. In Iraq, oil exports have collapsed to a drip 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 decade of civil war. We prepare for GDP development to typical 9.6% over 2026-2027, supported by renewed financial investment, particularly in banking and energy, financial reforms, and the gradual resuming of local trade links.

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The World Bank has slashed its 2026 growth projection for Middle East economies, stating general 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 actually interfered with markets, increased monetary volatility, and damaged 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 Hardship Outlook forecasts that the region's aggregate (excluding 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 because the January projections, showing the adverse impacts of the ongoing dispute.

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

Qatar: Especially, growth projection for the Qatari economy has actually seen a sharp decline of 11.0 portion points given that January. The economy is now expected to record a contraction of 5.7%, down from an estimated development of 5.3%, due to severe blockage to melted gas supplies. Qatar is an essential player in the international energy market, with a global market share of melted natural gas (LNG) products ranging in between 20% and 21%.

Kuwait relies completely (100%) on the Strait of Hormuz to export its crude oil and derivatives. Consequently, closing the strait would mean a complete shutdown of the country's financial lifeline, immediately stopping revenue inflows to the state spending plan. Bahrain: Growth projection for Bahrain's economy has actually decreased by 1.8 percentage points considering that January.