Future GCC Market Forecasts

Property prices 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 money sales. We believe the threat of a lasting migrant outflow and an extreme downturn in the real estate sector is low.

As a long lasting US-Iran deal takes shape, the fallout from the conflict has tightened up regional monetary conditions, exposing vulnerabilities through capital outflows, broader bond spreads, and weaker investor sentiment. A lot of GCC sovereigns carry relatively little debt and funding risks are for that reason limited in the UAE, the central bank's liquidity management has eased instant issues.

That stated, Bahrain has been able to rely on assistance from neighbours, consisting of 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 given that the war began. High-frequency financial information underscore the strain on local public financial resources from the dispute.

ANSR July GCC PRs 50DR+

Future Investment Landscape of the GCC

In Saudi Arabia, the budget deficit more than doubled to SAR125.7 bn, or about 9% of GDP in Q1, driven by a decline in oil profits and a rise in spending, especially on aids, reflecting contingency expenses connected to the regional environment and a velocity of Vision 2030 spending. 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 stay irregular, with food prices the primary source of upward pressure and inflation in this classification fortifying in Kuwait, Oman and Qatar. By contrast, food inflation stays fairly suppressed in Saudi Arabia, most likely reflecting the mitigating result of its larger domestic food production base and greater supply-chain strength.

We continue to view rate pressures as mainly transitory instead of indicative of a sustained inflationary cycle. Accordingly, we expect typical inflation to relieve 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 expect the United States Federal Reserve to keep rate of interest on hold up until December, and regional rate policies to follow match.

We expect Iran's GDP to diminish by 10.8% this year (we forecast a 9.4% contraction 3 months ago). Oil production and exports, which supply vital profits and FX inflows, have been reduced by the United States naval blockade, while non-oil activity has actually been seriously hit. In Iraq, oil exports have actually collapsed to a drip and we're anticipating 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 financial investment, particularly in banking and energy, monetary reforms, and the steady resuming of regional trade links.

Positioning GCC Portfolios against 2026 Shifts

The World Bank has slashed its 2026 growth forecast for Middle East economies, stating general 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 damage of energy and public facilities, had actually interfered with markets, increased monetary volatility, and deteriorated 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 anticipates that the region's aggregate (leaving out the Iran) GDP growth will slow down to 1.8 percent in 2026, down from 4.0 percent estimated for 2025. The 2026 forecast has actually been devalued by 2.4 percentage points since the January forecasts, reflecting the negative effects of the continuous conflict.

Saudi Arabia: Projection was devalued by 1.2 portion points because 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 portion points considering that January.

Qatar: Notably, growth projection for the Qatari economy has seen a sharp decrease of 11.0 portion points since January. The economy is now anticipated to record a contraction of 5.7%, down from an estimated development of 5.3%, due to severe blockage to melted gas materials. Qatar is a crucial gamer in the global energy market, with a global market share of melted gas (LNG) materials varying between 20% and 21%.

Kuwait relies entirely (100%) on the Strait of Hormuz to export its unrefined oil and derivatives. Closing the strait would imply a total shutdown of the nation's monetary lifeline, instantly halting profits inflows to the state spending plan. Bahrain: Development forecast for Bahrain's economy has actually decreased by 1.8 percentage points because January.