Key Equity Capital Strategies for GCC Investors

Residential or commercial property prices have come under pressure after a period of strong growth, with current data from the Dubai Land Department revealing a drop in home mortgage transactions and money sales. Nonetheless, we believe the risk of a lasting migrant outflow and an extreme slump in the realty sector is low.

As a lasting US-Iran deal takes shape, the fallout from the dispute has actually tightened up regional financial conditions, exposing vulnerabilities through capital outflows, broader bond spreads, and weaker financier belief. The majority of GCC sovereigns bring fairly little debt and funding dangers are for that reason limited in the UAE, the main bank's liquidity management has actually relieved instant issues.

That said, Bahrain has had the ability to rely 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 started. High-frequency fiscal data highlight the stress on local public finances from the conflict.

ANSR July GCC PRs 50DR+

Driving Non-Oil Growth through Strategic Diversification

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

GCC inflation characteristics stay 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 remains fairly subdued in Saudi Arabia, most likely reflecting the mitigating impact of its larger domestic food production base and greater supply-chain strength.

We continue to view rate pressures as mostly transitory instead of a sign of a sustained inflationary cycle. Accordingly, we expect average inflation to alleviate to 2.1% y/y in 2027 as short-lived supply-side pressures dissipate. With near-term inflation elevated and transit through the Strait most likely set to resume slowly, we expect the United States Federal Reserve to keep rates of interest on hold until December, and regional rate policies to follow match.

We anticipate Iran's GDP to shrink by 10.8% this year (we anticipate a 9.4% contraction three months ago). Oil production and exports, which provide necessary revenue and FX inflows, have been cut by the United States marine blockade, while non-oil activity has been badly 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 international economy after more than a decade of civil war. We expect GDP development to average 9.6% over 2026-2027, supported by restored investment, particularly in banking and energy, monetary reforms, and the progressive resuming of local trade links.

International Investment Opportunities across the Middle East

The World Bank has slashed its 2026 development forecast for Middle East economies, saying overall GDP development 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 actually interfered with markets, increased monetary volatility, and damaged 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 (omitting the Iran) GDP growth will decelerate to 1.8 percent in 2026, down from 4.0 percent estimated for 2025. The 2026 forecast has actually been downgraded by 2.4 portion points given that the January forecasts, reflecting the unfavorable results of the ongoing dispute.

Saudi Arabia: Forecast was devalued by 1.2 percentage 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 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, development forecast for the Qatari economy has seen a sharp decrease 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 serious blockage to liquefied gas supplies. Qatar is an essential player in the worldwide energy market, with an international market share of liquefied natural gas (LNG) supplies ranging between 20% and 21%.

Kuwait relies entirely (100%) on the Strait of Hormuz to export its unrefined oil and derivatives. As a result, closing the strait would indicate a total shutdown of the country's monetary lifeline, immediately stopping revenue inflows to the state budget. Bahrain: Development projection for Bahrain's economy has declined by 1.8 portion points since January.