Strategic Capital Expansion for 2026

Property prices have actually come under pressure after a duration of strong growth, with current data from the Dubai Land Department revealing a drop in home loan deals and money sales. We believe the danger of a lasting migrant outflow and an extreme decline in the real estate sector is low.

As a lasting US-Iran offer takes shape, the fallout from the conflict has actually tightened regional monetary conditions, exposing vulnerabilities through capital outflows, larger bond spreads, and weaker investor belief. The majority of GCC sovereigns carry relatively little financial obligation and funding risks are therefore restricted in the UAE, the reserve bank's liquidity management has actually reduced immediate issues.

That stated, Bahrain has 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 given that the war began. High-frequency financial information underscore the pressure on local public finances from the dispute.

ANSR July GCC PRs 50DR+

Mastering 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 decline in oil revenue and a rise in spending, particularly on subsidies, showing contingency outlays connected to the regional environment and an acceleration of Vision 2030 costs. In Qatar, the crisis brought oil and gas revenue to a halt, swelling the budget plan deficit to the biggest because 2017.

GCC inflation dynamics stay unequal, with food prices the primary source of upward pressure and inflation in this classification fortifying in Kuwait, Oman and Qatar. By contrast, food inflation remains reasonably suppressed in Saudi Arabia, likely reflecting the mitigating effect of its bigger domestic food production base and greater supply-chain strength.

We continue to see cost pressures as largely transitory instead of a sign of a sustained inflationary cycle. Accordingly, we expect average inflation to reduce to 2.1% y/y in 2027 as short-lived supply-side pressures dissipate. With near-term inflation elevated and transit through the Strait likely set to resume slowly, we expect the US Federal Reserve to keep rate of interest on hold till December, and regional rate policies to follow fit.

We anticipate Iran's GDP to diminish by 10.8% this year (we forecast a 9.4% contraction three months ago). Oil production and exports, which provide necessary profits and FX inflows, have been cut by the United States naval blockade, while non-oil activity has been badly struck. In Iraq, oil exports have actually 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 worldwide economy after more than a years of civil war. We prepare for GDP development to average 9.6% over 2026-2027, supported by restored financial investment, especially in banking and energy, financial reforms, and the gradual reopening of local trade links.

The 2026 Investment Climate in the GCC

The World Bank has slashed its 2026 development forecast for Middle East economies, stating general GDP growth in the area 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 destruction of energy and public infrastructure, had actually disrupted markets, increased financial volatility, and weakened the 2026 development 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 region's aggregate (omitting the Iran) GDP growth will slow down to 1.8 percent in 2026, below 4.0 percent approximated for 2025. The 2026 projection has been reduced by 2.4 percentage points because the January forecasts, reflecting the unfavorable effects of the continuous conflict.

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

Qatar: Especially, growth forecast for the Qatari economy has actually seen a sharp decrease of 11.0 portion points considering that January. The economy is now expected to tape-record a contraction of 5.7%, below an approximated growth of 5.3%, due to extreme blockage to melted gas materials. Qatar is an essential player in the international energy market, with a global market share of liquefied natural gas (LNG) products ranging in between 20% and 21%.

Kuwait relies completely (100%) on the Strait of Hormuz to export its crude oil and derivatives. Closing the strait would indicate a complete shutdown of the country's monetary lifeline, right away stopping revenue inflows to the state spending plan. Bahrain: Growth forecast for Bahrain's economy has declined by 1.8 portion points since January.