International Capital Opportunities across the GCC

Property costs have come under pressure after a period of strong growth, with recent data from the Dubai Land Department showing a drop in home loan transactions and cash sales. We think the risk of a long 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 actually tightened regional monetary conditions, exposing vulnerabilities through capital outflows, broader bond spreads, and weaker investor sentiment. Many GCC sovereigns bring fairly little financial obligation and funding risks are for that reason limited in the UAE, the main bank's liquidity management has relieved immediate issues.

That said, Bahrain has actually had the ability to rely on support 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 because the war began. High-frequency financial information highlight the stress on regional public financial resources from the conflict.

ANSR July GCC PRs 50DR+

Analyzing GCC Market Resilience for 2026

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 surge in costs, especially on subsidies, showing contingency expenses connected to the local environment and an acceleration of Vision 2030 spending. In Qatar, the crisis brought oil and gas revenue to a stop, swelling the budget deficit to the largest since 2017.

GCC inflation characteristics remain uneven, with food rates the main source of upward pressure and inflation in this category conditioning in Kuwait, Oman and Qatar. By contrast, food inflation remains fairly controlled in Saudi Arabia, likely showing the mitigating impact of its bigger domestic food production base and higher supply-chain strength.

We continue to view cost pressures as mainly temporal instead of indicative of a sustained inflationary cycle. Appropriately, we anticipate average inflation to relieve to 2.1% y/y in 2027 as short-term supply-side pressures dissipate. With near-term inflation raised and transit through the Strait most likely set to resume gradually, we expect the US Federal Reserve to keep interest rates on hold till December, and local rate policies to follow suit.

We anticipate Iran's GDP to diminish by 10.8% this year (we forecast a 9.4% contraction three months ago). Oil production and exports, which provide essential revenue and FX inflows, have actually been reduced by the United States marine blockade, while non-oil activity has been badly struck. In Iraq, oil exports have collapsed to a trickle 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 worldwide 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, especially in banking and energy, monetary reforms, and the progressive resuming of local trade links.

Key Economic Diversification in 2026

The World Bank has slashed its 2026 development projection for Middle East economies, stating general 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 actually interfered with markets, increased financial 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 forecasts that the region's aggregate (excluding 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 given that the January forecasts, reflecting the unfavorable results of the continuous conflict.

Saudi Arabia: Forecast was reduced by 1.2 percentage points considering that January. Development is now expected to slow from 4.3% in 2025 to 3.1% in 2026, keeping in mind that Saudi Arabia's outlook stays the greatest amongst Gulf economies. United Arab Emirates: Growth projection for the UAE has actually fallen by 2.7 portion points since January.

Qatar: Especially, development projection for the Qatari economy has seen a sharp decrease of 11.0 percentage points given that January. The economy is now expected to record a contraction of 5.7%, below an approximated development of 5.3%, due to extreme blockage to melted gas supplies. Qatar is a key gamer in the international energy market, with a worldwide market share of liquefied natural gas (LNG) supplies ranging between 20% and 21%.

Kuwait relies entirely (100%) on the Strait of Hormuz to export its petroleum and derivatives. Closing the strait would mean a total shutdown of the nation's financial lifeline, immediately stopping earnings inflows to the state budget. Bahrain: Development projection for Bahrain's economy has decreased by 1.8 percentage points given that January.