Key Economic Expansion in 2026

Home rates have come under pressure after a duration of strong growth, with current information from the Dubai Land Department showing a drop in mortgage transactions and money sales. However, we think the risk of an enduring migrant outflow and a serious slump in the genuine estate sector is low.

As an enduring US-Iran offer takes shape, the fallout from the conflict has actually tightened local financial conditions, exposing vulnerabilities through capital outflows, larger bond spreads, and weaker investor belief. Most GCC sovereigns carry fairly little debt and financing risks are therefore restricted in the UAE, the reserve bank's liquidity management has eased immediate concerns.

That stated, Bahrain has had the ability to rely on assistance 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 considering that the war started. High-frequency fiscal data highlight the pressure on regional public financial resources from the dispute.

ANSR July GCC PRs 50DR+

Evaluating GCC Investment Potential for 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 profits and a surge in costs, especially on aids, showing contingency outlays tied to the local environment and an acceleration of Vision 2030 costs. In Qatar, the crisis brought oil and gas revenue to a halt, swelling the spending plan deficit to the biggest since 2017.

GCC inflation characteristics stay irregular, with food costs the primary source of upward pressure and inflation in this category conditioning in Kuwait, Oman and Qatar. By contrast, food inflation remains relatively subdued in Saudi Arabia, likely reflecting the mitigating effect of its bigger domestic food production base and greater supply-chain durability.

We continue to view price pressures as mainly temporal instead of indicative of a sustained inflationary cycle. Appropriately, we expect typical 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 likely set to resume slowly, we expect the United States Federal Reserve to keep interest rates on hold until December, and local rate policies to follow fit.

We expect Iran's GDP to shrink by 10.8% this year (we anticipate a 9.4% contraction three months ago). Oil production and exports, which offer necessary revenue and FX inflows, have been curtailed by the US naval blockade, while non-oil activity has been severely struck. In Iraq, oil exports have actually collapsed to a trickle 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 international economy after more than a years of civil war. We expect GDP development to average 9.6% over 2026-2027, supported by renewed financial investment, especially in banking and energy, monetary reforms, and the steady reopening of local trade links.

The 2026 Investment Landscape of the GCC

The World Bank has slashed its 2026 development forecast for Middle East economies, stating general GDP growth in the region is expected to slow from an approximated 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 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 Hardship Outlook anticipates that the region's aggregate (leaving out the Iran) GDP development will slow down to 1.8 percent in 2026, below 4.0 percent approximated for 2025. The 2026 projection has been devalued by 2.4 portion points because the January projections, showing the unfavorable effects of the continuous conflict.

Saudi Arabia: Projection was downgraded by 1.2 percentage 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 stays the greatest amongst Gulf economies. United Arab Emirates: Development forecast for the UAE has actually fallen by 2.7 percentage points since January.

Qatar: Especially, growth projection for the Qatari economy has actually seen a sharp decrease of 11.0 percentage points because January. The economy is now expected to record a contraction of 5.7%, down from an estimated development of 5.3%, due to severe blockage to liquefied gas supplies. Qatar is a key gamer in the international energy market, with a worldwide market share of melted gas (LNG) supplies varying in between 20% and 21%.

Kuwait relies totally (100%) on the Strait of Hormuz to export its petroleum and derivatives. As a result, closing the strait would suggest a total shutdown of the nation's financial lifeline, immediately stopping revenue inflows to the state spending plan. Bahrain: Development projection for Bahrain's economy has declined by 1.8 portion points given that January.