GCC Equity Market Trends for 2026

Property rates have come under pressure after a duration of strong development, with current data from the Dubai Land Department revealing a drop in mortgage transactions and money sales. We believe the threat of an enduring migrant outflow and a serious recession in the real estate sector is low.

As a lasting US-Iran deal takes shape, the fallout from the conflict has tightened local monetary conditions, exposing vulnerabilities through capital outflows, wider bond spreads, and weaker investor belief. The majority of GCC sovereigns carry reasonably little debt and financing threats are for that reason limited in the UAE, the main bank's liquidity management has actually relieved immediate 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 area considering that the war began. High-frequency financial data underscore the strain on local public financial resources from the dispute.

ANSR July GCC PRs 50DR+

Navigating Investment Diversification in a Global Economy

In Saudi Arabia, the budget deficit 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 subsidies, reflecting contingency expenses tied to the local environment and an acceleration 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 irregular, with food costs the main source of upward pressure and inflation in this classification strengthening in Kuwait, Oman and Qatar. By contrast, food inflation stays fairly controlled in Saudi Arabia, likely showing the mitigating effect of its larger domestic food production base and higher supply-chain durability.

We continue to view price pressures as mostly transitory rather than a sign of a continual inflationary cycle. Accordingly, we expect average inflation to reduce to 2.1% y/y in 2027 as momentary supply-side pressures dissipate. With near-term inflation raised and transit through the Strait likely set to resume slowly, we expect the US Federal Reserve to keep rates of interest on hold until December, and regional rate policies to do the same.

We expect Iran's GDP to shrink by 10.8% this year (we anticipate a 9.4% contraction three months ago). Oil production and exports, which supply necessary earnings and FX inflows, have actually been curtailed by the US marine blockade, while non-oil activity has been significantly struck. In Iraq, oil exports have actually collapsed to a drip 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 international economy after more than a decade of civil war. We anticipate GDP growth to typical 9.6% over 2026-2027, supported by restored financial investment, especially in banking and energy, monetary reforms, and the progressive reopening of regional trade links.

Future-Proofing GCC Investments for 2026 Trends

The World Bank has slashed its 2026 growth projection for Middle East economies, saying overall GDP development in the region is expected to slow from an estimated 3.6% in January to 1.8% for 2026. The closure of the tactical Strait of Hormuz, and damage of energy and public infrastructure, had actually disrupted 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 (omitting the Iran) GDP growth 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 since the January forecasts, reflecting the unfavorable effects of the continuous dispute.

Saudi Arabia: Projection was devalued by 1.2 portion points because January. Growth is now expected to slow from 4.3% in 2025 to 3.1% in 2026, noting that Saudi Arabia's outlook remains the strongest amongst Gulf economies. United Arab Emirates: Growth projection for the UAE has actually fallen by 2.7 percentage points given that January.

Qatar: Significantly, growth forecast for the Qatari economy has seen a sharp decline of 11.0 percentage points given that January. The economy is now expected to tape-record a contraction of 5.7%, down from an approximated development of 5.3%, due to extreme obstruction to melted gas products. Qatar is a key gamer in the worldwide energy market, with a worldwide market share of liquefied natural gas (LNG) supplies ranging in between 20% and 21%.

Kuwait relies entirely (100%) on the Strait of Hormuz to export its unrefined oil and derivatives. Closing the strait would suggest a complete shutdown of the nation's financial lifeline, instantly halting profits inflows to the state spending plan. Bahrain: Development forecast for Bahrain's economy has declined by 1.8 portion points because January.