Assessing GCC Market Resilience for 2026

Property prices have come under pressure after a period of strong growth, with recent information from the Dubai Land Department showing a drop in home mortgage deals and cash sales. We think the threat of a long lasting migrant outflow and a serious recession in the genuine estate sector is low.

As an enduring US-Iran deal takes shape, the fallout from the conflict has actually tightened up regional financial conditions, exposing vulnerabilities through capital outflows, larger bond spreads, and weaker investor sentiment. Many GCC sovereigns bring relatively little financial obligation and financing threats are for that reason restricted in the UAE, the reserve bank's liquidity management has actually reduced immediate issues.

That said, Bahrain has actually had the ability to rely on assistance from neighbours, consisting of 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 area since the war began. High-frequency financial data underscore the pressure on local public financial resources from the dispute.

ANSR July GCC PRs 50DR+

Middle East Equity Trading Trends for 2026

In Saudi Arabia, the budget plan deficit more than doubled to SAR125.7 bn, or about 9% of GDP in Q1, driven by a decrease in oil profits and a rise in costs, particularly on subsidies, reflecting 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 uneven, with food prices the main source of upward pressure and inflation in this category conditioning in Kuwait, Oman and Qatar. By contrast, food inflation remains reasonably suppressed in Saudi Arabia, likely showing the mitigating result of its larger domestic food production base and higher supply-chain durability.

We continue to see rate pressures as mostly transitory rather than a sign of a continual inflationary cycle. Appropriately, we anticipate average inflation to alleviate to 2.1% y/y in 2027 as short-lived supply-side pressures dissipate. With near-term inflation elevated and transit through the Strait likely set to resume slowly, we anticipate the United States Federal Reserve to keep rate of interest on hold till 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 3 months ago). Oil production and exports, which offer vital income and FX inflows, have actually been cut by the US marine blockade, while non-oil activity has actually been seriously struck. In Iraq, oil exports have 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 global economy after more than a decade of civil war. We anticipate GDP growth to average 9.6% over 2026-2027, supported by restored financial investment, especially in banking and energy, monetary reforms, and the steady reopening of regional trade links.

Future Investment Landscape of Arabia

The World Bank has slashed its 2026 growth forecast for Middle East economies, stating general 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 destruction of energy and public infrastructure, had 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 Poverty Outlook forecasts that the region's aggregate (leaving out the Iran) GDP growth will decelerate to 1.8 percent in 2026, below 4.0 percent estimated for 2025. The 2026 projection has been reduced by 2.4 percentage points given that the January forecasts, reflecting the adverse effects of the ongoing dispute.

Saudi Arabia: Projection was downgraded by 1.2 portion 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 remains the strongest amongst Gulf economies. United Arab Emirates: Development forecast for the UAE has fallen by 2.7 portion points because January.

Qatar: Especially, development forecast for the Qatari economy has seen a sharp decline of 11.0 percentage points since January. The economy is now anticipated to tape a contraction of 5.7%, below an approximated growth of 5.3%, due to serious blockage to liquefied gas materials. Qatar is a key player in the global energy market, with a worldwide market share of melted natural gas (LNG) supplies ranging in between 20% and 21%.

Kuwait relies entirely (100%) on the Strait of Hormuz to export its petroleum and derivatives. As a result, closing the strait would indicate a total shutdown of the nation's financial lifeline, immediately halting income inflows to the state budget plan. Bahrain: Development projection for Bahrain's economy has actually decreased by 1.8 percentage points considering that January.