Securing GCC Portfolios for 2026 Trends

Property costs have come under pressure after a period of strong growth, with recent information from the Dubai Land Department showing a drop in home loan transactions and money sales. We believe the danger of an enduring migrant outflow and a severe downturn in the real estate sector is low.

As a long lasting US-Iran deal takes shape, the fallout from the conflict has tightened local financial conditions, exposing vulnerabilities through capital outflows, wider bond spreads, and weaker financier sentiment. A lot of GCC sovereigns carry fairly little debt and financing risks are therefore limited in the UAE, the main bank's liquidity management has alleviated instant concerns.

That stated, Bahrain has been able to count on assistance from neighbours, consisting of Saudi Arabia and the UAE, and it effectively raised $1bn from an oversubscribed sovereign bond sale this month, marking the first offering from the area because the war began. High-frequency fiscal information highlight the stress on local public finances from the dispute.

ANSR July GCC PRs 50DR+

Securing Middle East Investments against 2026 Trends

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 profits and a rise in costs, especially 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 profits to a stop, swelling the deficit spending to the largest given that 2017.

GCC inflation characteristics stay irregular, with food prices the main source of upward pressure and inflation in this category strengthening in Kuwait, Oman and Qatar. By contrast, food inflation stays reasonably suppressed in Saudi Arabia, most likely showing the mitigating effect of its larger domestic food production base and greater supply-chain resilience.

We continue to see rate pressures as mostly temporal rather than indicative of a sustained inflationary cycle. Accordingly, we expect typical inflation to relieve to 2.1% y/y in 2027 as short-lived supply-side pressures dissipate. With near-term inflation raised and transit through the Strait most likely set to resume gradually, we expect the United States Federal Reserve to keep rates of interest on hold until December, and local rate policies to follow match.

We anticipate Iran's GDP to shrink by 10.8% this year (we forecast a 9.4% contraction 3 months ago). Oil production and exports, which supply necessary income and FX inflows, have actually been curtailed by the US naval blockade, while non-oil activity has been significantly hit. 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 worldwide economy after more than a years of civil war. We prepare for GDP growth to typical 9.6% over 2026-2027, supported by restored investment, especially in banking and energy, monetary reforms, and the progressive reopening of regional trade links.

Top Foreign Investment Prospects in the GCC Region

The World Bank has slashed its 2026 development projection for Middle East economies, saying 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 strategic Strait of Hormuz, and destruction of energy and public facilities, had interrupted 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 (leaving out the Iran) GDP growth will decelerate to 1.8 percent in 2026, below 4.0 percent estimated for 2025. The 2026 forecast has been downgraded by 2.4 percentage points given that the January projections, reflecting the negative impacts of the continuous dispute.

Saudi Arabia: Projection was downgraded by 1.2 percentage points since 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 remains the strongest among Gulf economies. United Arab Emirates: Growth projection for the UAE has fallen by 2.7 portion points considering that January.

Qatar: Significantly, development projection for the Qatari economy has 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 serious blockage to melted gas materials. Qatar is a crucial gamer in the global energy market, with a global market share of liquefied natural gas (LNG) products ranging in between 20% and 21%.

Kuwait relies totally (100%) on the Strait of Hormuz to export its crude oil and derivatives. As a result, closing the strait would imply a total shutdown of the country's monetary lifeline, right away halting profits inflows to the state spending plan. Bahrain: Development forecast for Bahrain's economy has actually declined by 1.8 percentage points since January.