Middle East Stock Market Trends in 2026

Property prices have actually come under pressure after a duration of strong development, with current information from the Dubai Land Department showing a drop in home mortgage deals and money sales. However, we think the risk of a long lasting migrant outflow and a serious downturn in the realty sector is low.

As an enduring US-Iran deal takes shape, the fallout from the dispute has actually tightened up local monetary conditions, exposing vulnerabilities through capital outflows, wider bond spreads, and weaker investor belief. Many GCC sovereigns carry fairly little financial obligation and funding risks are therefore restricted in the UAE, the main bank's liquidity management has actually alleviated immediate concerns.

That stated, Bahrain has been able to count on assistance from neighbours, including Saudi Arabia and the UAE, and it successfully raised $1bn from an oversubscribed sovereign bond sale this month, marking the very first offering from the region since the war started. High-frequency financial data underscore the stress on regional public finances from the dispute.

ANSR July GCC PRs 50DR+

Key International Investment Prospects for the GCC Market

In Saudi Arabia, the deficit spending more than doubled to SAR125.7 bn, or about 9% of GDP in Q1, driven by a decline in oil earnings and a rise in spending, especially on subsidies, showing contingency outlays connected to the regional 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 largest because 2017.

GCC inflation dynamics stay unequal, with food rates the main source of upward pressure and inflation in this classification fortifying in Kuwait, Oman and Qatar. By contrast, food inflation stays relatively subdued in Saudi Arabia, likely reflecting the mitigating result of its bigger domestic food production base and greater supply-chain durability.

We continue to see cost pressures as mainly temporal rather than indicative of a continual inflationary cycle. Accordingly, we expect average inflation to relieve to 2.1% y/y in 2027 as short-lived supply-side pressures dissipate. With near-term inflation elevated and transit through the Strait most likely set to resume gradually, we anticipate the US Federal Reserve to keep rate of interest on hold up until December, and regional rate policies to follow match.

We anticipate Iran's GDP to diminish by 10.8% this year (we forecast a 9.4% contraction 3 months ago). Oil production and exports, which offer essential profits and FX inflows, have actually been curtailed by the US naval blockade, while non-oil activity has been significantly struck. In Iraq, oil exports have actually collapsed to a drip and we're anticipating 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 years of civil war. We expect GDP growth to typical 9.6% over 2026-2027, supported by restored financial investment, particularly in banking and energy, monetary reforms, and the progressive resuming of regional trade links.

2026 Investment Climate in the GCC

The World Bank has actually slashed its 2026 growth forecast for Middle East economies, saying general GDP growth in the region is expected to slow from an estimated 3.6% in January to 1.8% for 2026. The closure of the tactical Strait of Hormuz, and destruction of energy and public infrastructure, had actually disrupted 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 Hardship Outlook anticipates that the region's aggregate (excluding the Iran) GDP growth will decelerate to 1.8 percent in 2026, down from 4.0 percent approximated for 2025. The 2026 forecast has been reduced by 2.4 portion points given that the January projections, showing the adverse results of the ongoing dispute.

Saudi Arabia: Forecast was reduced by 1.2 portion points considering that 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 amongst Gulf economies. United Arab Emirates: Growth forecast for the UAE has fallen by 2.7 percentage points since January.

Qatar: Especially, development projection for the Qatari economy has seen a sharp decrease of 11.0 percentage points since January. The economy is now expected to record a contraction of 5.7%, below an estimated development of 5.3%, due to severe obstruction to melted gas products. Qatar is an essential player in the worldwide energy market, with a global market share of liquefied gas (LNG) materials varying in between 20% and 21%.

Kuwait relies entirely (100%) on the Strait of Hormuz to export its crude oil and derivatives. Closing the strait would suggest a total shutdown of the country's financial lifeline, right away halting earnings inflows to the state budget. Bahrain: Development forecast for Bahrain's economy has actually decreased by 1.8 percentage points given that January.