Evaluating GCC Investment Resilience for 2026

Residential or commercial property costs have come under pressure after a duration of strong development, with current data from the Dubai Land Department showing a drop in home loan transactions and money sales. Nonetheless, we believe the risk of a long lasting migrant outflow and a serious recession in the realty sector is low.

As an enduring US-Iran deal takes shape, the fallout from the conflict has actually tightened up regional monetary conditions, exposing vulnerabilities through capital outflows, wider bond spreads, and weaker investor sentiment. Many GCC sovereigns bring relatively little debt and funding dangers are therefore restricted in the UAE, the main bank's liquidity management has actually reduced immediate concerns.

That said, Bahrain has had the ability to rely on support from neighbours, including Saudi Arabia and the UAE, and it successfully raised $1bn from an oversubscribed sovereign bond sale this month, marking the very first offering from the region since the war began. High-frequency fiscal data highlight the pressure on local public finances from the conflict.

ANSR July GCC PRs 50DR+

Upcoming Middle Eastern Economic Forecasts

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 earnings and a surge in spending, particularly on subsidies, reflecting contingency outlays connected to the local environment and a velocity of Vision 2030 spending. In Qatar, the crisis brought oil and gas earnings to a halt, swelling the budget deficit to the largest since 2017.

GCC inflation dynamics remain uneven, with food rates the main source of upward pressure and inflation in this category fortifying in Kuwait, Oman and Qatar. By contrast, food inflation stays relatively subdued in Saudi Arabia, likely reflecting the mitigating effect of its bigger domestic food production base and higher supply-chain durability.

We continue to see cost pressures as largely temporal rather than indicative of a continual inflationary cycle. Accordingly, we expect average inflation to reduce to 2.1% y/y in 2027 as momentary supply-side pressures dissipate. With near-term inflation raised and transit through the Strait likely set to resume slowly, we anticipate the US Federal Reserve to keep interest rates on hold till December, and local rate policies to do the same.

We anticipate 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 essential income and FX inflows, have actually been curtailed by the US marine blockade, while non-oil activity has actually 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 years of civil war. We expect GDP growth to average 9.6% over 2026-2027, supported by restored financial investment, especially in banking and energy, monetary reforms, and the progressive resuming of regional trade links.

Positioning Middle East Investments for 2026 Shifts

The World Bank has actually slashed its 2026 growth projection for Middle East economies, stating general GDP growth 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 actually interfered with markets, increased monetary volatility, and damaged 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 Poverty Outlook forecasts that the region's aggregate (omitting the Iran) GDP development will slow down to 1.8 percent in 2026, below 4.0 percent approximated for 2025. The 2026 forecast has been downgraded by 2.4 portion points considering that the January forecasts, showing the adverse effects of the continuous conflict.

Saudi Arabia: Projection was reduced by 1.2 portion points given that 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 remains the greatest among Gulf economies. United Arab Emirates: Growth forecast for the UAE has fallen by 2.7 percentage points because January.

Qatar: Significantly, development forecast for the Qatari economy has seen a sharp decrease of 11.0 percentage points since January. The economy is now expected to record a contraction of 5.7%, below an estimated growth of 5.3%, due to serious blockage to liquefied gas materials. Qatar is an essential gamer in the global energy market, with a global market share of liquefied natural gas (LNG) products ranging between 20% and 21%.

Kuwait relies totally (100%) on the Strait of Hormuz to export its petroleum and derivatives. Closing the strait would suggest a total shutdown of the country's financial lifeline, immediately stopping earnings inflows to the state budget plan. Bahrain: Growth projection for Bahrain's economy has actually decreased by 1.8 portion points since January.