Essential Equity Market Insights for GCC Investors

Property prices have actually come under pressure after a period of strong development, with recent information from the Dubai Land Department showing a drop in home loan deals and cash sales. Nevertheless, we believe the threat of a long lasting migrant outflow and an extreme recession in the property sector is low.

As an enduring US-Iran deal takes shape, the fallout from the dispute has tightened local financial conditions, exposing vulnerabilities through capital outflows, broader bond spreads, and weaker investor belief. A lot of GCC sovereigns carry relatively little debt and funding threats are for that reason limited in the UAE, the main bank's liquidity management has reduced immediate concerns.

That stated, Bahrain has actually had the ability to depend on assistance 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 given that the war began. High-frequency financial information underscore the pressure on local public finances from the conflict.

ANSR July GCC PRs 50DR+

Navigating Investment Strategies in a Global Economy

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 spending, particularly on subsidies, reflecting contingency investments tied to the regional environment and a velocity of Vision 2030 spending. In Qatar, the crisis brought oil and gas income to a halt, swelling the spending plan deficit to the biggest because 2017.

GCC inflation characteristics remain uneven, with food costs the main source of upward pressure and inflation in this category fortifying in Kuwait, Oman and Qatar. By contrast, food inflation stays relatively subdued in Saudi Arabia, likely showing the mitigating effect of its bigger domestic food production base and greater supply-chain durability.

We continue to view cost pressures as mainly transitory rather than indicative of a continual inflationary cycle. Accordingly, we expect average inflation to ease to 2.1% y/y in 2027 as short-term supply-side pressures dissipate. With near-term inflation raised and transit through the Strait most likely set to resume gradually, we anticipate the United States Federal Reserve to keep interest rates on hold until December, and local rate policies to do the same.

We anticipate 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 necessary income and FX inflows, have actually been curtailed by the United States marine blockade, while non-oil activity has actually been significantly struck. In Iraq, oil exports have actually collapsed to a drip and we're forecasting 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 global economy after more than a years of civil war. We anticipate GDP development to average 9.6% over 2026-2027, supported by restored financial investment, particularly in banking and energy, financial reforms, and the progressive reopening of local trade links.

Securing Regional Portfolios against 2026 Shifts

The World Bank has slashed its 2026 growth projection for Middle East economies, saying overall GDP growth in the region is anticipated to slow from an approximated 3.6% in January to 1.8% for 2026. The closure of the strategic Strait of Hormuz, and destruction of energy and public facilities, had interfered with markets, increased monetary volatility, and weakened 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 forecasts that the region's aggregate (leaving out the Iran) GDP development will decrease to 1.8 percent in 2026, below 4.0 percent estimated for 2025. The 2026 forecast has actually been reduced by 2.4 portion points considering that the January forecasts, showing the unfavorable impacts of the ongoing conflict.

Saudi Arabia: Projection was downgraded by 1.2 portion points considering that January. Development is now expected to slow from 4.3% in 2025 to 3.1% in 2026, keeping in mind that Saudi Arabia's outlook stays the strongest among Gulf economies. United Arab Emirates: Growth projection for the UAE has actually fallen by 2.7 percentage points because January.

Qatar: Especially, development projection for the Qatari economy has actually seen a sharp decrease of 11.0 percentage points given 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 liquefied gas supplies. Qatar is an essential gamer in the international energy market, with a global market share of liquefied natural gas (LNG) products ranging between 20% and 21%.

Kuwait relies completely (100%) on the Strait of Hormuz to export its petroleum and derivatives. Closing the strait would suggest a complete shutdown of the nation's financial lifeline, instantly halting income inflows to the state budget plan. Bahrain: Development forecast for Bahrain's economy has actually decreased by 1.8 percentage points since January.