Critical Equity Market Insights for GCC Investors

Home prices have come under pressure after a period of strong growth, with recent information from the Dubai Land Department revealing a drop in home mortgage deals and money sales. Nonetheless, we think the threat of an enduring migrant outflow and an extreme slump in the genuine estate sector is low.

As a long lasting US-Iran offer takes shape, the fallout from the conflict has tightened up local monetary conditions, exposing vulnerabilities through capital outflows, larger bond spreads, and weaker financier belief. A lot of GCC sovereigns bring fairly little debt and funding threats are therefore limited in the UAE, the central bank's liquidity management has relieved immediate concerns.

That stated, Bahrain has actually been able to depend 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 very first offering from the region because the war started. High-frequency financial data highlight the stress on regional public financial resources from the dispute.

ANSR July GCC PRs 50DR+

Securing Regional Portfolios against 2026 Shifts

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 costs, especially on aids, showing contingency outlays connected to the local environment and an acceleration of Vision 2030 spending. In Qatar, the crisis brought oil and gas profits to a halt, swelling the spending plan deficit to the largest given that 2017.

GCC inflation dynamics remain uneven, with food prices the main source of upward pressure and inflation in this category conditioning in Kuwait, Oman and Qatar. By contrast, food inflation stays reasonably suppressed in Saudi Arabia, likely reflecting the mitigating result of its bigger domestic food production base and higher supply-chain durability.

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

We expect Iran's GDP to shrink by 10.8% this year (we anticipate a 9.4% contraction 3 months ago). Oil production and exports, which provide vital earnings and FX inflows, have actually been reduced by the United States marine blockade, while non-oil activity has been seriously hit. In Iraq, oil exports have actually collapsed to a trickle and we're anticipating 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 anticipate GDP growth to average 9.6% over 2026-2027, supported by renewed financial investment, especially in banking and energy, monetary reforms, and the steady resuming of regional trade links.

Accelerating Non-Oil Success via Global Diversification

The World Bank has slashed its 2026 development projection for Middle East economies, stating total GDP growth 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 interfered with markets, increased monetary volatility, and compromised 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 area's aggregate (excluding the Iran) GDP growth will decrease to 1.8 percent in 2026, below 4.0 percent approximated for 2025. The 2026 projection has been reduced by 2.4 portion points considering that the January forecasts, reflecting the negative effects of the continuous dispute.

Saudi Arabia: Forecast was reduced by 1.2 portion points because January. Growth 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 amongst Gulf economies. United Arab Emirates: Development projection for the UAE has fallen by 2.7 percentage points considering that January.

Qatar: Notably, development projection for the Qatari economy has actually seen a sharp decline of 11.0 percentage points given that January. The economy is now expected to record a contraction of 5.7%, below an approximated development of 5.3%, due to extreme obstruction to melted gas materials. Qatar is an essential player in the global energy market, with an international market share of liquefied gas (LNG) materials ranging between 20% and 21%.

Kuwait relies totally (100%) on the Strait of Hormuz to export its unrefined oil and derivatives. Closing the strait would mean a complete shutdown of the country's financial lifeline, immediately stopping revenue inflows to the state budget. Bahrain: Growth forecast for Bahrain's economy has actually declined by 1.8 percentage points considering that January.