Key Equity Capital Insights for Regional Investors

Home prices have come under pressure after a duration of strong growth, with current data from the Dubai Land Department showing a drop in mortgage transactions and cash sales. However, we believe the danger of a lasting migrant outflow and a serious slump in the property sector is low.

As an enduring US-Iran deal takes shape, the fallout from the dispute has actually tightened up regional monetary conditions, exposing vulnerabilities through capital outflows, wider bond spreads, and weaker financier belief. Most GCC sovereigns bring reasonably little financial obligation and financing dangers are for that reason restricted in the UAE, the reserve bank's liquidity management has actually alleviated instant concerns.

That said, Bahrain has had the ability to rely 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 region since the war started. High-frequency fiscal data highlight the stress on regional public finances from the dispute.

ANSR July GCC PRs 50DR+

Upcoming GCC Economic Forecasts

In Saudi Arabia, the budget plan deficit more than doubled to SAR125.7 bn, or about 9% of GDP in Q1, driven by a decline in oil profits and a surge in spending, particularly on aids, reflecting contingency outlays tied to the regional environment and an acceleration of Vision 2030 costs. In Qatar, the crisis brought oil and gas income to a halt, swelling the deficit spending to the largest given that 2017.

GCC inflation characteristics remain uneven, with food prices the primary source of upward pressure and inflation in this classification strengthening in Kuwait, Oman and Qatar. By contrast, food inflation remains relatively suppressed in Saudi Arabia, likely showing the mitigating result of its bigger domestic food production base and higher supply-chain durability.

We continue to see price pressures as largely transitory rather than a sign of a sustained inflationary cycle. Accordingly, we expect typical inflation to alleviate to 2.1% y/y in 2027 as momentary supply-side pressures dissipate. With near-term inflation elevated and transit through the Strait most likely set to resume slowly, we anticipate the United States Federal Reserve to keep rates of interest on hold up until December, and local rate policies to do the same.

We anticipate Iran's GDP to diminish by 10.8% this year (we forecast a 9.4% contraction three months ago). Oil production and exports, which supply necessary earnings and FX inflows, have been curtailed by the US naval blockade, while non-oil activity has actually been significantly struck. In Iraq, oil exports have actually collapsed to a drip 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 international economy after more than a years of civil war. We anticipate GDP development to average 9.6% over 2026-2027, supported by renewed investment, particularly in banking and energy, financial reforms, and the steady resuming of regional trade links.

Advancing Economic Growth through Global Diversification

The World Bank has slashed its 2026 growth projection for Middle East economies, saying total GDP development in the area is expected 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 interrupted 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 anticipates that the region's aggregate (omitting the Iran) GDP growth will decrease to 1.8 percent in 2026, down from 4.0 percent approximated for 2025. The 2026 forecast has actually been devalued by 2.4 percentage points given that the January forecasts, reflecting the unfavorable effects of the continuous conflict.

Saudi Arabia: Projection was devalued by 1.2 percentage points given that January. Development 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: Growth projection for the UAE has fallen by 2.7 portion points because January.

Qatar: Significantly, growth projection for the Qatari economy has actually seen a sharp decline 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 obstruction to liquefied gas supplies. Qatar is a key player in the international energy market, with a global market share of melted natural gas (LNG) supplies varying in between 20% and 21%.

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