Key Equity Capital Insights for GCC Investors

Residential or commercial property costs have actually come under pressure after a period of strong growth, with recent data from the Dubai Land Department revealing a drop in home mortgage deals and money sales. However, we believe the risk of an enduring migrant outflow and a severe slump in the property sector is low.

As a lasting US-Iran deal takes shape, the fallout from the conflict has tightened local financial conditions, exposing vulnerabilities through capital outflows, wider bond spreads, and weaker investor sentiment. Many GCC sovereigns carry reasonably little financial obligation and financing dangers are therefore restricted in the UAE, the main bank's liquidity management has reduced immediate concerns.

That said, Bahrain has 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 very first offering from the region considering that the war started. High-frequency fiscal information underscore the pressure on local public financial resources from the conflict.

ANSR July GCC PRs 50DR+

Advancing Non-Oil Success via Global Diversification

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 profits and a surge in spending, particularly on aids, reflecting contingency expenses tied to the regional environment and an acceleration of Vision 2030 costs. In Qatar, the crisis brought oil and gas profits to a stop, swelling the deficit spending to the biggest since 2017.

GCC inflation characteristics stay unequal, with food costs the main source of upward pressure and inflation in this category fortifying in Kuwait, Oman and Qatar. By contrast, food inflation remains fairly suppressed in Saudi Arabia, likely reflecting the mitigating impact of its larger domestic food production base and greater supply-chain resilience.

We continue to view cost pressures as largely transitory rather than a sign of a sustained inflationary cycle. Accordingly, we anticipate average inflation to ease to 2.1% y/y in 2027 as temporary 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 rate of interest on hold up until December, and local rate policies to follow fit.

We anticipate Iran's GDP to shrink by 10.8% this year (we anticipate a 9.4% contraction 3 months ago). Oil production and exports, which offer vital income and FX inflows, have been reduced by the US naval blockade, while non-oil activity has been badly hit. In Iraq, oil exports have actually 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 international economy after more than a years of civil war. We expect GDP growth to typical 9.6% over 2026-2027, supported by restored investment, especially in banking and energy, financial reforms, and the steady resuming of regional trade links.

Why Industrial Shifts Will Transform GCC Markets

The World Bank has actually slashed its 2026 growth forecast for Middle East economies, stating general GDP development in the region is anticipated to slow from an approximated 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 interfered with markets, increased monetary volatility, and compromised the 2026 development 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 approximated for 2025. The 2026 forecast has actually been downgraded by 2.4 portion points since the January forecasts, showing the negative results of the continuous conflict.

Saudi Arabia: Projection was downgraded by 1.2 portion points given that January. Growth is now expected to slow from 4.3% in 2025 to 3.1% in 2026, keeping in mind that Saudi Arabia's outlook remains the greatest among Gulf economies. United Arab Emirates: Development 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 percentage points given that January. The economy is now expected to tape a contraction of 5.7%, below an approximated development of 5.3%, due to severe blockage to melted gas supplies. Qatar is a key gamer in the worldwide energy market, with a worldwide market share of liquefied gas (LNG) products ranging between 20% and 21%.

Kuwait relies completely (100%) on the Strait of Hormuz to export its crude oil and derivatives. Consequently, closing the strait would indicate a complete shutdown of the nation's financial lifeline, right away halting earnings inflows to the state spending plan. Bahrain: Growth forecast for Bahrain's economy has actually declined by 1.8 portion points since January.