Essential Capital Expansion for 2026

Property costs have actually come under pressure after a duration of strong development, with recent data from the Dubai Land Department revealing a drop in mortgage transactions and money sales. We believe the threat of a long lasting migrant outflow and an extreme slump in the genuine estate sector is low.

As an enduring US-Iran deal takes shape, the fallout from the conflict has actually tightened up local financial conditions, exposing vulnerabilities through capital outflows, wider bond spreads, and weaker investor belief. Most GCC sovereigns carry reasonably little debt and financing threats are therefore limited in the UAE, the reserve bank's liquidity management has reduced immediate issues.

That said, Bahrain has had the ability 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 very first offering from the area because the war started. High-frequency financial information underscore the pressure on regional public finances from the conflict.

ANSR July GCC PRs 50DR+

Mastering Investment Strategies in a 2026 Economy

In Saudi Arabia, the budget 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 costs, particularly on subsidies, showing contingency expenses tied to the local environment and a velocity of Vision 2030 costs. In Qatar, the crisis brought oil and gas revenue to a halt, swelling the budget deficit to the largest since 2017.

GCC inflation characteristics remain unequal, 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 relatively controlled in Saudi Arabia, likely showing the mitigating effect of its bigger domestic food production base and greater supply-chain resilience.

We continue to see price pressures as largely temporal instead of indicative of a sustained inflationary cycle. Appropriately, we expect typical inflation to alleviate to 2.1% y/y in 2027 as short-lived supply-side pressures dissipate. With near-term inflation raised and transit through the Strait likely set to resume slowly, we anticipate the US Federal Reserve to keep rate of interest on hold up until December, and local rate policies to do the same.

We expect Iran's GDP to diminish by 10.8% this year (we forecast a 9.4% contraction three months ago). Oil production and exports, which provide necessary income and FX inflows, have been reduced by the US marine blockade, while non-oil activity has actually been severely 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 global economy after more than a years of civil war. We prepare for GDP growth to typical 9.6% over 2026-2027, supported by renewed investment, especially in banking and energy, monetary reforms, and the steady resuming of regional trade links.

Future Regional Market Forecasts

The World Bank has actually slashed its 2026 development projection for Middle East economies, stating general GDP growth in the region is anticipated to slow from an approximated 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 disrupted markets, increased financial volatility, and weakened the 2026 growth 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 area's aggregate (omitting the Iran) GDP growth will slow down to 1.8 percent in 2026, below 4.0 percent estimated for 2025. The 2026 projection has been devalued by 2.4 portion points considering that the January forecasts, showing the negative results of the continuous 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 greatest among Gulf economies. United Arab Emirates: Development forecast for the UAE has fallen by 2.7 portion points since January.

Qatar: Especially, development projection for the Qatari economy has seen a sharp decline of 11.0 portion points given that January. The economy is now anticipated to tape a contraction of 5.7%, down from an approximated growth of 5.3%, due to serious blockage to melted gas materials. Qatar is a crucial player in the global energy market, with an international market share of liquefied gas (LNG) products ranging in between 20% and 21%.

Kuwait relies entirely (100%) on the Strait of Hormuz to export its petroleum and derivatives. Subsequently, closing the strait would mean a total shutdown of the country's monetary lifeline, right away halting earnings inflows to the state spending plan. Bahrain: Development forecast for Bahrain's economy has actually declined by 1.8 portion points since January.