Future GCC Market Outlook

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. Nonetheless, we believe the threat of a lasting migrant outflow and a serious downturn in the genuine estate sector is low.

As a long lasting US-Iran deal takes shape, the fallout from the dispute has actually tightened up regional monetary conditions, exposing vulnerabilities through capital outflows, larger bond spreads, and weaker financier belief. A lot of GCC sovereigns bring reasonably little debt and funding risks are for that reason limited in the UAE, the reserve bank's liquidity management has actually eased instant issues.

That said, Bahrain has had the ability to rely on support 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 area because the war began. High-frequency fiscal data highlight the stress on regional public financial resources from the conflict.

ANSR July GCC PRs 50DR+

Key International Capital Prospects in the GCC Region

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 spending, particularly on subsidies, reflecting contingency investments tied to the regional environment and an acceleration of Vision 2030 spending. In Qatar, the crisis brought oil and gas revenue to a halt, swelling the spending plan deficit to the biggest since 2017.

GCC inflation dynamics stay unequal, with food prices the primary source of upward pressure and inflation in this category strengthening in Kuwait, Oman and Qatar. By contrast, food inflation stays reasonably suppressed in Saudi Arabia, most likely showing the mitigating result of its larger domestic food production base and higher supply-chain durability.

We continue to view price pressures as largely temporal rather than a sign of a continual inflationary cycle. Appropriately, we expect average inflation to ease to 2.1% y/y in 2027 as temporary supply-side pressures dissipate. With near-term inflation elevated and transit through the Strait likely set to resume gradually, we anticipate the US Federal Reserve to keep interest rates on hold till December, and local rate policies to do the same.

We anticipate Iran's GDP to shrink by 10.8% this year (we anticipate a 9.4% contraction 3 months ago). Oil production and exports, which supply vital income and FX inflows, have been cut by the US marine blockade, while non-oil activity has been severely hit. In Iraq, oil exports have actually collapsed to a trickle and we're forecasting 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 worldwide economy after more than a decade 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 progressive reopening of local trade links.

Why Economic Diversification Will Shape GCC Markets

The World Bank has slashed its 2026 growth projection for Middle East economies, stating overall GDP development 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 actually interfered with markets, increased financial volatility, and deteriorated the 2026 growth 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 Hardship Outlook anticipates that the area's aggregate (omitting the Iran) GDP development will slow down to 1.8 percent in 2026, down from 4.0 percent estimated for 2025. The 2026 forecast has been downgraded by 2.4 percentage points because the January projections, showing the adverse impacts of the continuous dispute.

Saudi Arabia: Forecast was reduced by 1.2 portion 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 remains the strongest among Gulf economies. United Arab Emirates: Growth forecast for the UAE has fallen by 2.7 portion points since January.

Qatar: Notably, growth projection for the Qatari economy has seen a sharp decrease of 11.0 percentage points considering that January. The economy is now anticipated to tape-record a contraction of 5.7%, below an approximated growth of 5.3%, due to serious obstruction to melted gas products. Qatar is an essential gamer in the international energy market, with a worldwide market share of melted natural gas (LNG) products ranging between 20% and 21%.

Kuwait relies totally (100%) on the Strait of Hormuz to export its crude oil and derivatives. Subsequently, closing the strait would suggest a complete shutdown of the country's financial lifeline, right away stopping profits inflows to the state budget plan. Bahrain: Development projection for Bahrain's economy has declined by 1.8 portion points because January.