Future-Proofing Regional Portfolios for 2026 Trends

Residential or commercial property costs have come under pressure after a period of strong growth, with current information from the Dubai Land Department showing a drop in home loan transactions and money sales. Nonetheless, we believe the danger of a lasting migrant outflow and an extreme recession in the property sector is low.

As an enduring US-Iran deal takes shape, the fallout from the dispute has actually tightened up local monetary conditions, exposing vulnerabilities through capital outflows, wider bond spreads, and weaker financier sentiment. A lot of GCC sovereigns carry fairly little debt and financing threats are for that reason restricted in the UAE, the reserve bank's liquidity management has eased instant issues.

That said, Bahrain has actually 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 first offering from the area because the war began. High-frequency financial information highlight the stress on local public financial resources from the conflict.

ANSR July GCC PRs 50DR+

Upcoming GCC Market Outlook

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

GCC inflation characteristics stay unequal, with food costs the primary source of upward pressure and inflation in this category conditioning in Kuwait, Oman and Qatar. By contrast, food inflation stays reasonably suppressed in Saudi Arabia, most likely reflecting the mitigating impact of its bigger domestic food production base and greater supply-chain durability.

We continue to see cost pressures as largely transitory rather than indicative of a continual inflationary cycle. Appropriately, we expect average inflation to relieve to 2.1% y/y in 2027 as temporary supply-side pressures dissipate. With near-term inflation raised and transit through the Strait most likely set to resume gradually, we anticipate the US Federal Reserve to keep interest rates on hold up until December, and local rate policies to follow suit.

We expect Iran's GDP to diminish by 10.8% this year (we forecast a 9.4% contraction three months ago). Oil production and exports, which supply necessary profits and FX inflows, have actually been cut by the US naval blockade, while non-oil activity has been significantly 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 worldwide economy after more than a decade 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 reopening of regional trade links.

Optimizing Capital Strategies for a Global Economy

The World Bank has slashed its 2026 growth forecast for Middle East economies, stating total GDP growth in the region is anticipated to slow from an approximated 3.6% in January to 1.8% for 2026. The closure of the tactical Strait of Hormuz, and destruction of energy and public facilities, had actually disrupted markets, increased monetary volatility, and compromised 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 (omitting the Iran) GDP development 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 portion points given that the January forecasts, reflecting the adverse effects of the continuous dispute.

Saudi Arabia: Projection was devalued 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 greatest among Gulf economies. United Arab Emirates: Development forecast for the UAE has actually fallen by 2.7 percentage points given that January.

Qatar: Especially, development forecast for the Qatari economy has actually seen a sharp decline of 11.0 portion points since January. The economy is now anticipated to record a contraction of 5.7%, down from an approximated growth of 5.3%, due to severe blockage to melted gas products. Qatar is an essential player in the worldwide energy market, with a worldwide market share of melted gas (LNG) products varying between 20% and 21%.

Kuwait relies entirely (100%) on the Strait of Hormuz to export its petroleum and derivatives. Subsequently, closing the strait would indicate a total shutdown of the nation's financial lifeline, instantly stopping profits inflows to the state budget. Bahrain: Development forecast for Bahrain's economy has actually declined by 1.8 portion points since January.