2026 GCC Financial Forecasts

Home rates have come under pressure after a period of strong development, with current data from the Dubai Land Department showing a drop in mortgage deals and money sales. We believe the threat of an enduring migrant outflow and a serious slump in the real estate sector is low.

As an enduring US-Iran offer takes shape, the fallout from the dispute has tightened regional monetary conditions, exposing vulnerabilities through capital outflows, broader bond spreads, and weaker investor belief. Most GCC sovereigns bring relatively little financial obligation and financing threats are for that reason limited in the UAE, the central bank's liquidity management has actually minimized immediate concerns.

That said, Bahrain has actually been able to depend on assistance from neighbours, consisting of Saudi Arabia and the UAE, and it successfully raised $1bn from an oversubscribed sovereign bond sale this month, marking the first offering from the region because the war began. High-frequency financial data underscore the strain on local public financial resources from the dispute.

ANSR July GCC PRs 50DR+

Evaluating GCC Investment Resilience for 2026

In Saudi Arabia, the spending plan deficit 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, especially on aids, showing contingency expenses connected to the regional environment and a velocity of Vision 2030 spending. In Qatar, the crisis brought oil and gas income to a stop, swelling the deficit spending to the largest given that 2017.

GCC inflation characteristics stay unequal, with food rates the main source of upward pressure and inflation in this classification conditioning in Kuwait, Oman and Qatar. By contrast, food inflation remains fairly suppressed in Saudi Arabia, most likely reflecting the mitigating effect of its bigger domestic food production base and higher supply-chain durability.

We continue to see rate pressures as largely temporal instead of a sign of a sustained inflationary cycle. Appropriately, we expect average inflation to alleviate 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 anticipate the United States Federal Reserve to keep rates of interest on hold up until December, and local rate policies to follow match.

We expect Iran's GDP to diminish by 10.8% this year (we forecast a 9.4% contraction 3 months ago). Oil production and exports, which supply necessary revenue and FX inflows, have been reduced by the United States marine blockade, while non-oil activity has been significantly 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 worldwide economy after more than a years of civil war. We expect GDP growth to average 9.6% over 2026-2027, supported by restored financial investment, especially in banking and energy, financial reforms, and the progressive resuming of regional trade links.

2026 Middle Eastern Economic Forecasts

The World Bank has slashed its 2026 development forecast for Middle East economies, saying total GDP growth in the area 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 damage of energy and public facilities, had actually interfered with markets, increased financial 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 Poverty Outlook forecasts that the area's aggregate (excluding the Iran) GDP growth will decelerate to 1.8 percent in 2026, below 4.0 percent estimated for 2025. The 2026 forecast has actually been devalued by 2.4 portion points since the January projections, reflecting the unfavorable results of the ongoing dispute.

Saudi Arabia: Projection was devalued by 1.2 portion points since 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 greatest amongst Gulf economies. United Arab Emirates: Development projection for the UAE has fallen by 2.7 percentage points because January.

Qatar: Significantly, growth projection for the Qatari economy has seen a sharp decrease of 11.0 portion points given that January. The economy is now expected to record a contraction of 5.7%, down from an approximated growth of 5.3%, due to extreme obstruction to liquefied gas supplies. Qatar is a key gamer in the worldwide energy market, with an international market share of melted natural gas (LNG) materials varying in between 20% and 21%.

Kuwait relies totally (100%) on the Strait of Hormuz to export its petroleum and derivatives. Closing the strait would mean a complete shutdown of the country's monetary lifeline, immediately stopping revenue inflows to the state budget. Bahrain: Development projection for Bahrain's economy has actually decreased by 1.8 percentage points given that January.