Securing Middle East Portfolios against 2026 Trends

Home rates have actually come under pressure after a period of strong growth, with current data from the Dubai Land Department showing a drop in mortgage deals and money sales. However, we believe the threat of an enduring migrant outflow and an extreme recession in the realty sector is low.

As an enduring US-Iran deal takes shape, the fallout from the conflict has actually tightened up local monetary conditions, exposing vulnerabilities through capital outflows, broader bond spreads, and weaker investor sentiment. The majority of GCC sovereigns carry fairly little financial obligation and financing risks are therefore limited in the UAE, the central bank's liquidity management has actually eased instant issues.

That said, Bahrain has actually been able to count 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 area given that the war began. High-frequency fiscal data highlight the strain on regional public finances from the conflict.

ANSR July GCC PRs 50DR+

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In Saudi Arabia, the deficit spending more than doubled to SAR125.7 bn, or about 9% of GDP in Q1, driven by a decline in oil revenue and a surge in spending, particularly on subsidies, showing contingency expenses connected to the regional environment and a velocity of Vision 2030 costs. In Qatar, the crisis brought oil and gas earnings to a stop, swelling the deficit spending to the largest considering that 2017.

GCC inflation characteristics remain uneven, with food rates the primary source of upward pressure and inflation in this classification strengthening in Kuwait, Oman and Qatar. By contrast, food inflation remains reasonably subdued in Saudi Arabia, likely reflecting the mitigating effect of its bigger domestic food production base and greater supply-chain strength.

We continue to view price pressures as largely temporal instead of indicative of a sustained inflationary cycle. Appropriately, we anticipate typical inflation to ease to 2.1% y/y in 2027 as momentary supply-side pressures dissipate. With near-term inflation raised and transit through the Strait most likely set to resume slowly, we anticipate the US Federal Reserve to keep rate of interest on hold until December, and regional rate policies to do the same.

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 important earnings and FX inflows, have actually been cut by the US marine blockade, while non-oil activity has been seriously 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 years of civil war. We prepare for GDP development to typical 9.6% over 2026-2027, supported by renewed financial investment, particularly in banking and energy, financial reforms, and the gradual resuming of regional trade links.

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The World Bank has actually slashed its 2026 growth forecast for Middle East economies, stating general GDP development 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 damage of energy and public facilities, had actually disrupted markets, increased financial volatility, and compromised the 2026 development 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 area's aggregate (excluding the Iran) GDP development will slow down to 1.8 percent in 2026, below 4.0 percent estimated for 2025. The 2026 projection has been devalued by 2.4 portion points given that the January projections, showing the unfavorable impacts of the continuous conflict.

Saudi Arabia: Forecast was reduced by 1.2 percentage points considering 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 remains the greatest amongst Gulf economies. United Arab Emirates: Growth forecast for the UAE has fallen by 2.7 portion points given that January.

Qatar: Notably, development forecast for the Qatari economy has seen a sharp decrease of 11.0 portion points because January. The economy is now expected to record a contraction of 5.7%, below an estimated development of 5.3%, due to serious obstruction to melted gas supplies. Qatar is a key player in the global energy market, with a global market share of melted gas (LNG) supplies varying between 20% and 21%.

Kuwait relies entirely (100%) on the Strait of Hormuz to export its petroleum and derivatives. Closing the strait would indicate a complete shutdown of the nation's monetary lifeline, immediately halting profits inflows to the state budget. Bahrain: Development forecast for Bahrain's economy has declined by 1.8 percentage points considering that January.