Future Regional Economic Projections

Residential or commercial property costs have come under pressure after a period of strong development, with current information from the Dubai Land Department showing a drop in home loan deals and money sales. We think the threat of a long lasting migrant outflow and an extreme slump in the genuine estate sector is low.

As an enduring US-Iran offer takes shape, the fallout from the conflict has actually tightened regional monetary conditions, exposing vulnerabilities through capital outflows, larger bond spreads, and weaker financier belief. Many GCC sovereigns carry fairly little financial obligation and financing threats are for that reason limited in the UAE, the central bank's liquidity management has alleviated instant issues.

That stated, Bahrain has actually been able to depend 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 very first offering from the region because the war started. High-frequency fiscal data highlight the stress on local public financial resources from the conflict.

ANSR July GCC PRs 50DR+

The 2026 Business Landscape in the GCC

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 revenue and a rise in costs, especially on subsidies, reflecting contingency outlays 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 deficit spending to the largest since 2017.

GCC inflation dynamics remain irregular, with food prices the main source of upward pressure and inflation in this classification fortifying in Kuwait, Oman and Qatar. By contrast, food inflation stays fairly suppressed in Saudi Arabia, likely reflecting the mitigating result of its larger domestic food production base and greater supply-chain resilience.

We continue to see rate pressures as mainly temporal instead of indicative of a continual inflationary cycle. Accordingly, we expect average inflation to relieve to 2.1% y/y in 2027 as short-term supply-side pressures dissipate. With near-term inflation elevated and transit through the Strait most likely set to resume slowly, we expect the United States Federal Reserve to keep rate of interest on hold up until December, and local rate policies to follow fit.

We expect Iran's GDP to shrink by 10.8% this year (we forecast a 9.4% contraction three months ago). Oil production and exports, which offer important earnings and FX inflows, have been cut by the United States marine blockade, while non-oil activity has been severely struck. In Iraq, oil exports have collapsed to a trickle and we're forecasting GDP to contract 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 years of civil war. We expect GDP development to average 9.6% over 2026-2027, supported by renewed investment, particularly in banking and energy, monetary reforms, and the progressive resuming of local trade links.

Key International Investment Prospects for the GCC Region

The World Bank has slashed its 2026 development projection for Middle East economies, saying total GDP development in the area is expected to slow from an approximated 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 interfered with markets, increased monetary volatility, and damaged 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 forecasts that the area's aggregate (omitting the Iran) GDP growth will slow down to 1.8 percent in 2026, down from 4.0 percent estimated for 2025. The 2026 forecast has been reduced by 2.4 portion points considering that the January forecasts, reflecting the negative impacts of the continuous conflict.

Saudi Arabia: Forecast was reduced by 1.2 portion points considering 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 forecast for the UAE has actually fallen by 2.7 percentage points considering that January.

Qatar: Especially, development projection for the Qatari economy has seen a sharp decline of 11.0 portion points considering that January. The economy is now expected to tape a contraction of 5.7%, below an approximated growth of 5.3%, due to severe blockage to liquefied gas products. Qatar is an essential gamer in the international energy market, with an international market share of melted gas (LNG) materials ranging in between 20% and 21%.

Kuwait relies completely (100%) on the Strait of Hormuz to export its petroleum and derivatives. Consequently, closing the strait would imply a complete shutdown of the country's monetary lifeline, right away stopping revenue inflows to the state budget plan. Bahrain: Growth forecast for Bahrain's economy has actually decreased by 1.8 portion points considering that January.