Top International Investment Prospects in the GCC Market

Property prices have actually come under pressure after a period of strong development, with current data from the Dubai Land Department showing a drop in mortgage deals and cash sales. We believe the risk of a lasting migrant outflow and an extreme recession in the genuine estate sector is low.

As a lasting US-Iran deal takes shape, the fallout from the dispute has actually tightened up regional monetary conditions, exposing vulnerabilities through capital outflows, broader bond spreads, and weaker investor belief. The majority of GCC sovereigns bring fairly little financial obligation and financing risks are for that reason restricted in the UAE, the main bank's liquidity management has actually eased immediate concerns.

That said, Bahrain has been able to depend 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 area because the war started. High-frequency fiscal data underscore the stress on local public financial resources from the conflict.

ANSR July GCC PRs 50DR+

Key Foreign Investment Prospects 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 decline in oil revenue and a rise in costs, especially on aids, reflecting contingency investments tied to the local environment and an acceleration of Vision 2030 spending. In Qatar, the crisis brought oil and gas income to a halt, swelling the deficit spending to the biggest considering that 2017.

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

We continue to view cost pressures as mainly transitory rather than indicative of a continual inflationary cycle. Accordingly, we expect average inflation to ease 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 rate of interest on hold till December, and regional 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 offer important income and FX inflows, have actually been cut by the US marine blockade, while non-oil activity has been badly struck. In Iraq, oil exports have 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 international 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, particularly in banking and energy, monetary reforms, and the steady reopening of local trade links.

Why Economic Diversification Can Shape GCC Markets

The World Bank has slashed its 2026 growth forecast for Middle East economies, saying overall GDP development in the region is anticipated to slow from an approximated 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 interrupted markets, increased monetary volatility, and weakened the 2026 development 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 anticipates that the region's aggregate (excluding the Iran) GDP development will decelerate to 1.8 percent in 2026, down from 4.0 percent approximated for 2025. The 2026 projection has been devalued by 2.4 portion points because the January forecasts, showing the unfavorable results of the continuous conflict.

Saudi Arabia: Forecast was devalued by 1.2 portion points because 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 greatest among Gulf economies. United Arab Emirates: Growth projection for the UAE has fallen by 2.7 percentage points because January.

Qatar: Notably, development forecast for the Qatari economy has actually seen a sharp decline of 11.0 percentage points because January. The economy is now anticipated to tape a contraction of 5.7%, down from an estimated growth of 5.3%, due to serious obstruction to liquefied gas products. Qatar is an essential player in the international energy market, with an international market share of liquefied natural gas (LNG) materials varying in between 20% and 21%.

Kuwait relies completely (100%) on the Strait of Hormuz to export its petroleum and derivatives. Consequently, closing the strait would indicate a complete shutdown of the nation's financial lifeline, immediately halting earnings inflows to the state budget. Bahrain: Development forecast for Bahrain's economy has decreased by 1.8 percentage points because January.