Critical Equity Market Insights for GCC Investors

Home rates have come under pressure after a period of strong development, with recent information from the Dubai Land Department revealing a drop in home mortgage deals and cash sales. We think the threat of an enduring migrant outflow and an extreme recession in the real estate sector is low.

As a lasting US-Iran deal takes shape, the fallout from the conflict has tightened regional financial conditions, exposing vulnerabilities through capital outflows, larger bond spreads, and weaker financier belief. The majority of GCC sovereigns carry reasonably little debt and financing risks are for that reason restricted in the UAE, the reserve bank's liquidity management has actually relieved instant concerns.

That stated, Bahrain has actually been able to count on support from neighbours, including 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 since the war started. High-frequency financial information highlight the strain on regional public financial resources from the conflict.

ANSR July GCC PRs 50DR+

Navigating Investment Strategies in a 2026 Economy

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 earnings and a rise in spending, especially 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 spending plan deficit to the largest given that 2017.

GCC inflation characteristics remain irregular, with food prices the primary source of upward pressure and inflation in this classification strengthening in Kuwait, Oman and Qatar. By contrast, food inflation stays relatively suppressed in Saudi Arabia, most likely reflecting the mitigating effect of its larger domestic food production base and greater supply-chain strength.

We continue to view rate pressures as mostly temporal instead of indicative of a sustained inflationary cycle. Accordingly, we expect typical inflation to ease to 2.1% y/y in 2027 as short-term supply-side pressures dissipate. With near-term inflation elevated 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 expect Iran's GDP to shrink by 10.8% this year (we forecast a 9.4% contraction three months ago). Oil production and exports, which supply vital earnings and FX inflows, have been reduced by the United States naval blockade, while non-oil activity has actually been severely hit. In Iraq, oil exports have collapsed to a drip 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 worldwide economy after more than a decade of civil war. We prepare for GDP growth to typical 9.6% over 2026-2027, supported by renewed financial investment, especially in banking and energy, financial reforms, and the gradual resuming of regional trade links.

Future GCC Market Forecasts

The World Bank has slashed its 2026 growth projection for Middle East economies, stating total GDP growth in the region is anticipated to slow from an estimated 3.6% in January to 1.8% for 2026. The closure of the tactical Strait of Hormuz, and destruction of energy and public facilities, had interfered with markets, increased financial volatility, and compromised the 2026 growth outlook, the World Bank Group stated 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 area's aggregate (omitting the Iran) GDP development will decelerate to 1.8 percent in 2026, below 4.0 percent approximated for 2025. The 2026 projection has been reduced by 2.4 percentage points given that the January projections, reflecting the negative impacts of the ongoing dispute.

Saudi Arabia: Forecast was downgraded by 1.2 percentage points considering that 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: Growth forecast for the UAE has actually fallen by 2.7 percentage points given that January.

Qatar: Notably, development projection for the Qatari economy has seen a sharp decline of 11.0 portion points given that January. The economy is now expected to tape a contraction of 5.7%, down from an estimated development of 5.3%, due to extreme obstruction to liquefied gas products. Qatar is a key player in the global energy market, with a global market share of melted natural gas (LNG) supplies ranging in between 20% and 21%.

Kuwait relies entirely (100%) on the Strait of Hormuz to export its petroleum and derivatives. Consequently, closing the strait would indicate a total shutdown of the nation's financial lifeline, right away stopping revenue inflows to the state spending plan. Bahrain: Development forecast for Bahrain's economy has actually decreased by 1.8 portion points since January.