Future Business Climate in the GCC

Residential or commercial property rates have come under pressure after a duration of strong growth, with current data from the Dubai Land Department showing a drop in home loan transactions and cash sales. Nonetheless, we believe the risk of a long lasting migrant outflow and an extreme slump in the realty sector is low.

As a long lasting US-Iran offer takes shape, the fallout from the conflict has actually tightened regional financial conditions, exposing vulnerabilities through capital outflows, wider bond spreads, and weaker investor sentiment. Most GCC sovereigns bring fairly little financial obligation and funding threats are therefore restricted in the UAE, the central bank's liquidity management has actually relieved immediate issues.

That said, Bahrain has been able to rely on support 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 given that the war began. High-frequency fiscal data underscore the stress on regional public finances from the conflict.

ANSR July GCC PRs 50DR+

Key Industrial Expansion for 2026

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 earnings and a rise in costs, particularly on subsidies, reflecting contingency investments connected to the local environment and a velocity of Vision 2030 spending. In Qatar, the crisis brought oil and gas revenue to a halt, swelling the deficit spending to the biggest because 2017.

GCC inflation characteristics remain irregular, with food prices the primary source of upward pressure and inflation in this category strengthening in Kuwait, Oman and Qatar. By contrast, food inflation remains reasonably subdued in Saudi Arabia, most likely showing the mitigating impact of its bigger domestic food production base and greater supply-chain strength.

We continue to see price pressures as largely temporal instead of indicative of a sustained inflationary cycle. Accordingly, we anticipate typical inflation to alleviate 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 United States Federal Reserve to keep rate of interest on hold up until December, and regional rate policies to do the same.

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 important profits and FX inflows, have actually been cut by the US naval blockade, while non-oil activity has been badly struck. In Iraq, oil exports have actually 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 worldwide economy after more than a decade of civil war. We expect GDP growth to average 9.6% over 2026-2027, supported by renewed investment, particularly in banking and energy, financial reforms, and the gradual resuming of regional trade links.

Driving Industrial Success through Global Diversification

The World Bank has slashed its 2026 growth forecast for Middle East economies, saying overall GDP growth in the area 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 financial volatility, and compromised 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 Poverty Outlook anticipates that the region's aggregate (excluding the Iran) GDP growth will decrease to 1.8 percent in 2026, down from 4.0 percent estimated for 2025. The 2026 projection has been reduced by 2.4 percentage points since the January projections, reflecting the adverse impacts of the continuous dispute.

Saudi Arabia: Forecast was downgraded by 1.2 portion points because 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 fallen by 2.7 percentage points considering that January.

Qatar: Significantly, development projection for the Qatari economy has actually seen a sharp decrease of 11.0 portion points because January. The economy is now expected to record a contraction of 5.7%, down from an approximated development of 5.3%, due to severe blockage to liquefied gas products. Qatar is a key gamer in the international energy market, with a global market share of melted natural gas (LNG) materials ranging in between 20% and 21%.

Kuwait relies completely (100%) on the Strait of Hormuz to export its crude oil and derivatives. Closing the strait would imply a complete shutdown of the country's monetary lifeline, instantly halting earnings inflows to the state budget. Bahrain: Growth projection for Bahrain's economy has decreased by 1.8 percentage points considering that January.