Accelerating Economic Growth through Global Diversification

Property rates have come under pressure after a duration of strong development, with current data from the Dubai Land Department revealing a drop in home mortgage deals and money sales. Nonetheless, we believe the risk of a long lasting migrant outflow and an extreme downturn in the realty sector is low.

As an enduring US-Iran offer takes shape, the fallout from the conflict has tightened local financial conditions, exposing vulnerabilities through capital outflows, wider bond spreads, and weaker investor sentiment. A lot of GCC sovereigns carry relatively little financial obligation and funding risks are therefore limited in the UAE, the central bank's liquidity management has actually alleviated immediate issues.

That stated, Bahrain has been able to count on support from neighbours, including Saudi Arabia and the UAE, and it successfully raised $1bn from an oversubscribed sovereign bond sale this month, marking the first offering from the region since the war started. High-frequency financial data underscore the stress on regional public finances from the dispute.

ANSR July GCC PRs 50DR+

Global Investment Opportunities across the GCC

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 profits and a surge in costs, especially on aids, reflecting contingency outlays connected to the regional environment and an acceleration of Vision 2030 spending. In Qatar, the crisis brought oil and gas profits to a halt, swelling the deficit spending to the biggest since 2017.

GCC inflation dynamics remain irregular, with food rates the main source of upward pressure and inflation in this category strengthening in Kuwait, Oman and Qatar. By contrast, food inflation remains fairly controlled in Saudi Arabia, likely reflecting the mitigating impact of its larger domestic food production base and higher supply-chain resilience.

We continue to view rate pressures as mostly transitory rather than a sign of a sustained 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 rate of interest 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 anticipate a 9.4% contraction three months ago). Oil production and exports, which provide essential earnings and FX inflows, have been cut by the United States naval blockade, while non-oil activity has been severely struck. In Iraq, oil exports have collapsed to a drip and we're anticipating 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 decade of civil war. We prepare for GDP development to average 9.6% over 2026-2027, supported by renewed financial investment, especially in banking and energy, monetary reforms, and the gradual reopening of local trade links.

The Future Business Landscape of Arabia

The World Bank has actually slashed its 2026 growth forecast for Middle East economies, stating overall GDP development in the region 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 damage of energy and public facilities, had actually disrupted markets, increased financial volatility, and damaged 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 (omitting the Iran) GDP development will decrease to 1.8 percent in 2026, below 4.0 percent approximated for 2025. The 2026 forecast has been devalued by 2.4 percentage points considering that the January projections, reflecting the unfavorable results of the ongoing conflict.

Saudi Arabia: Projection was reduced by 1.2 percentage points considering that January. Growth is now expected 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 given that January.

Qatar: Especially, development projection for the Qatari economy has seen a sharp decline of 11.0 percentage points considering that January. The economy is now anticipated to tape-record a contraction of 5.7%, down from an estimated development of 5.3%, due to extreme blockage to liquefied gas supplies. Qatar is an essential gamer in the global energy market, with a worldwide market share of melted gas (LNG) products ranging between 20% and 21%.

Kuwait relies totally (100%) on the Strait of Hormuz to export its unrefined oil and derivatives. Closing the strait would indicate a complete shutdown of the country's financial lifeline, right away halting earnings inflows to the state budget plan. Bahrain: Development forecast for Bahrain's economy has decreased by 1.8 portion points since January.