Driving Industrial Success through Strategic Diversification

Residential or commercial property rates have actually come under pressure after a duration of strong development, with recent information from the Dubai Land Department revealing a drop in mortgage deals and cash sales. We believe the risk of a lasting migrant outflow and an extreme recession in the genuine estate sector is low.

As a long lasting US-Iran offer takes shape, the fallout from the dispute has tightened regional financial conditions, exposing vulnerabilities through capital outflows, wider bond spreads, and weaker investor sentiment. The majority of GCC sovereigns carry reasonably little financial obligation and financing threats are for that reason limited in the UAE, the reserve bank's liquidity management has actually eased instant issues.

That stated, Bahrain has actually had the ability to depend 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 first offering from the area since the war started. High-frequency financial data underscore the stress on local public finances from the dispute.

ANSR July GCC PRs 50DR+

Emerging Equity Market Patterns 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 revenue and a rise in costs, particularly on aids, showing contingency outlays tied to the local environment and an acceleration of Vision 2030 spending. In Qatar, the crisis brought oil and gas earnings to a stop, swelling the deficit spending to the largest considering that 2017.

GCC inflation dynamics stay irregular, 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 controlled in Saudi Arabia, most likely showing the mitigating effect of its bigger domestic food production base and higher supply-chain strength.

We continue to see cost pressures as mainly temporal instead of a sign of a continual inflationary cycle. Accordingly, we anticipate average inflation to reduce to 2.1% y/y in 2027 as short-lived supply-side pressures dissipate. With near-term inflation raised and transit through the Strait likely set to resume gradually, we expect the US Federal Reserve to keep rate of interest on hold until December, and regional rate policies to do the same.

We expect Iran's GDP to shrink by 10.8% this year (we anticipate a 9.4% contraction three months ago). Oil production and exports, which supply necessary profits and FX inflows, have been cut by the US naval blockade, while non-oil activity has been significantly hit. 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 global economy after more than a decade of civil war. We anticipate GDP growth to average 9.6% over 2026-2027, supported by renewed financial investment, especially in banking and energy, financial reforms, and the steady reopening of local trade links.

Critical Equity Capital Insights for Regional Investors

The World Bank has actually slashed its 2026 growth forecast for Middle East economies, saying overall GDP growth in the area 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 interrupted markets, increased financial volatility, and weakened 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 Poverty Outlook anticipates that the area'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 forecast has actually been downgraded by 2.4 percentage points considering that the January projections, showing the adverse effects of the continuous conflict.

Saudi Arabia: Projection was devalued by 1.2 percentage points because January. Development is now anticipated 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 projection for the UAE has actually fallen by 2.7 percentage points because January.

Qatar: Notably, development forecast for the Qatari economy has actually seen a sharp decline of 11.0 portion points since January. The economy is now expected to tape a contraction of 5.7%, below an estimated development of 5.3%, due to extreme blockage to melted gas supplies. Qatar is an essential player in the worldwide energy market, with an international 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 imply a complete shutdown of the country's financial lifeline, right away halting income inflows to the state budget plan. Bahrain: Development projection for Bahrain's economy has declined by 1.8 percentage points since January.