Assessing GCC Market Resilience in 2026

Home costs have come under pressure after a period of strong development, with current information from the Dubai Land Department revealing a drop in home loan transactions and money sales. Nonetheless, we think the threat of an enduring migrant outflow and an extreme slump in the genuine estate sector is low.

As an enduring US-Iran deal takes shape, the fallout from the dispute has tightened regional financial conditions, exposing vulnerabilities through capital outflows, broader bond spreads, and weaker investor sentiment. A lot of GCC sovereigns bring relatively little financial obligation and funding dangers are therefore restricted in the UAE, the main bank's liquidity management has actually reduced instant concerns.

That said, Bahrain has been able to count 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 given that the war started. High-frequency financial information highlight the strain on regional public finances from the conflict.

ANSR July GCC PRs 50DR+

Global Capital Opportunities across the Middle East

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 earnings and a rise in costs, particularly on aids, reflecting contingency investments connected to the local environment and a velocity of Vision 2030 costs. In Qatar, the crisis brought oil and gas income to a halt, swelling the deficit spending to the biggest given that 2017.

GCC inflation dynamics stay uneven, with food costs the primary source of upward pressure and inflation in this category fortifying in Kuwait, Oman and Qatar. By contrast, food inflation remains fairly suppressed in Saudi Arabia, most likely reflecting the mitigating effect of its larger domestic food production base and higher supply-chain durability.

We continue to see cost pressures as mostly transitory rather than indicative of a sustained inflationary cycle. Appropriately, we expect average inflation to alleviate 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 slowly, we expect the United States Federal Reserve to keep interest rates on hold until December, and local rate policies to follow suit.

We anticipate Iran's GDP to diminish by 10.8% this year (we anticipate a 9.4% contraction 3 months ago). Oil production and exports, which offer necessary profits and FX inflows, have been reduced by the US naval blockade, while non-oil activity has been badly struck. In Iraq, oil exports have 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 global economy after more than a years of civil war. We anticipate GDP development to average 9.6% over 2026-2027, supported by restored investment, especially in banking and energy, monetary reforms, and the progressive resuming of local trade links.

Analyzing Regional Investment Potential for 2026

The World Bank has slashed its 2026 growth projection for Middle East economies, stating general GDP growth in the area 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 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 (omitting the Iran) GDP development will decelerate to 1.8 percent in 2026, below 4.0 percent approximated for 2025. The 2026 forecast has actually been downgraded by 2.4 percentage points given that the January forecasts, showing the unfavorable effects of the ongoing dispute.

Saudi Arabia: Projection was reduced by 1.2 portion points since January. Development is now expected to slow from 4.3% in 2025 to 3.1% in 2026, noting that Saudi Arabia's outlook remains the greatest among Gulf economies. United Arab Emirates: Development forecast for the UAE has actually fallen by 2.7 percentage points considering that January.

Qatar: Especially, growth projection for the Qatari economy has seen a sharp decrease 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 growth of 5.3%, due to severe obstruction to melted gas products. Qatar is a crucial gamer in the worldwide energy market, with an international market share of melted natural gas (LNG) supplies varying between 20% and 21%.

Kuwait relies completely (100%) on the Strait of Hormuz to export its petroleum and derivatives. Closing the strait would indicate a total shutdown of the country's financial lifeline, immediately halting profits inflows to the state spending plan. Bahrain: Growth forecast for Bahrain's economy has actually decreased by 1.8 portion points considering that January.