Critical Stock Market Insights for GCC Growth

Residential or commercial property prices have actually come under pressure after a duration of strong development, with current data from the Dubai Land Department revealing a drop in home mortgage deals and money sales. We think the threat of a long lasting migrant outflow and an extreme slump in the genuine estate sector is low.

As an enduring US-Iran offer takes shape, the fallout from the conflict has tightened regional monetary conditions, exposing vulnerabilities through capital outflows, larger bond spreads, and weaker financier sentiment. A lot of GCC sovereigns bring reasonably little financial obligation and financing dangers are therefore restricted in the UAE, the reserve bank's liquidity management has minimized immediate concerns.

That said, Bahrain has actually been able to rely on assistance from neighbours, including Saudi Arabia and the UAE, and it effectively raised $1bn from an oversubscribed sovereign bond sale this month, marking the first offering from the region since the war began. High-frequency financial information highlight the stress on local public finances from the dispute.

ANSR July GCC PRs 50DR+

Key Foreign Capital Avenues for the GCC Market

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, particularly on aids, reflecting contingency investments tied to the local environment and a velocity of Vision 2030 costs. In Qatar, the crisis brought oil and gas earnings to a halt, swelling the budget deficit to the biggest considering that 2017.

GCC inflation characteristics stay irregular, with food rates the primary source of upward pressure and inflation in this classification fortifying in Kuwait, Oman and Qatar. By contrast, food inflation stays fairly controlled in Saudi Arabia, likely reflecting the mitigating impact of its larger domestic food production base and greater supply-chain durability.

We continue to view price pressures as mainly temporal instead of indicative of a sustained inflationary cycle. Appropriately, we expect typical 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 slowly, we expect the US Federal Reserve to keep interest rates on hold up until December, and regional 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 offer essential profits and FX inflows, have been reduced by the US marine blockade, while non-oil activity has been seriously hit. 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 international economy after more than a years of civil war. We anticipate GDP development to average 9.6% over 2026-2027, supported by renewed investment, especially in banking and energy, monetary reforms, and the steady reopening of local trade links.

Evaluating GCC Investment Potential for 2026

The World Bank has slashed its 2026 growth projection for Middle East economies, saying total GDP development in the area is expected to slow from an approximated 3.6% in January to 1.8% for 2026. The closure of the strategic Strait of Hormuz, and damage of energy and public infrastructure, had disrupted markets, increased monetary volatility, and deteriorated 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 forecasts that the region's aggregate (leaving out the Iran) GDP development will slow down to 1.8 percent in 2026, below 4.0 percent approximated for 2025. The 2026 forecast has actually been reduced by 2.4 percentage points considering that the January forecasts, showing the unfavorable results of the ongoing conflict.

Saudi Arabia: Forecast was downgraded by 1.2 percentage points considering 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 greatest among Gulf economies. United Arab Emirates: Development forecast for the UAE has actually fallen by 2.7 percentage points since January.

Qatar: Notably, growth projection for the Qatari economy has seen a sharp decrease of 11.0 percentage points considering that January. The economy is now expected to record a contraction of 5.7%, below an estimated development of 5.3%, due to extreme obstruction to liquefied gas products. Qatar is a crucial player in the worldwide energy market, with a worldwide market share of melted natural gas (LNG) products varying in between 20% and 21%.

Kuwait relies entirely (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, right away stopping profits inflows to the state budget. Bahrain: Development projection for Bahrain's economy has actually decreased by 1.8 portion points given that January.