Evaluating GCC Market Potential for 2026

Property costs have actually come under pressure after a period of strong growth, with current information from the Dubai Land Department showing a drop in mortgage deals and cash sales. We believe the risk of a lasting migrant outflow and a severe decline in the genuine estate sector is low.

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

That stated, Bahrain has actually had the ability to rely on assistance 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 area because the war began. High-frequency fiscal information highlight the stress on local public finances from the conflict.

ANSR July GCC PRs 50DR+

Middle East Stock Trading Patterns in 2026

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 income and a rise in spending, especially on subsidies, showing contingency outlays connected to the local environment and an acceleration of Vision 2030 spending. In Qatar, the crisis brought oil and gas earnings to a stop, swelling the budget plan deficit to the biggest because 2017.

GCC inflation dynamics stay irregular, with food prices the primary source of upward pressure and inflation in this category strengthening in Kuwait, Oman and Qatar. By contrast, food inflation remains fairly controlled in Saudi Arabia, likely reflecting the mitigating impact of its larger domestic food production base and higher supply-chain durability.

We continue to see cost pressures as mainly transitory rather than indicative of a continual inflationary cycle. Accordingly, we anticipate average inflation to alleviate to 2.1% y/y in 2027 as short-term supply-side pressures dissipate. With near-term inflation elevated and transit through the Strait likely set to resume gradually, we expect the United States Federal Reserve to keep interest rates on hold till December, and regional rate policies to follow fit.

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 supply essential income and FX inflows, have been reduced by the US marine blockade, while non-oil activity has actually been severely hit. In Iraq, oil exports have collapsed to a drip 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 worldwide economy after more than a years of civil war. We anticipate GDP development to average 9.6% over 2026-2027, supported by restored financial investment, especially in banking and energy, monetary reforms, and the steady resuming of regional trade links.

Essential Economic Expansion for the Future

The World Bank has slashed its 2026 development projection for Middle East economies, saying overall GDP development in the area is expected to slow from an approximated 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 disrupted markets, increased monetary volatility, and weakened 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 Poverty Outlook anticipates that the area's aggregate (excluding the Iran) GDP growth will slow down to 1.8 percent in 2026, below 4.0 percent estimated for 2025. The 2026 projection has been downgraded by 2.4 percentage points because the January projections, showing the unfavorable impacts of the ongoing conflict.

Saudi Arabia: Projection was devalued by 1.2 percentage points considering that January. Growth is now expected to slow from 4.3% in 2025 to 3.1% in 2026, noting that Saudi Arabia's outlook stays the strongest among Gulf economies. United Arab Emirates: Growth projection for the UAE has actually fallen by 2.7 portion points considering that January.

Qatar: Especially, development forecast for the Qatari economy has actually seen a sharp decrease of 11.0 percentage points because January. The economy is now anticipated to record a contraction of 5.7%, below an approximated development of 5.3%, due to severe obstruction to melted gas products. Qatar is a key gamer in the global energy market, with a worldwide market share of liquefied natural gas (LNG) materials ranging in between 20% and 21%.

Kuwait relies entirely (100%) on the Strait of Hormuz to export its crude oil and derivatives. Closing the strait would indicate a total shutdown of the nation's financial lifeline, instantly stopping earnings inflows to the state budget plan. Bahrain: Growth projection for Bahrain's economy has decreased by 1.8 portion points because January.