Key Foreign Capital Avenues for the GCC Region

Property costs have come under pressure after a period of strong development, with recent information from the Dubai Land Department revealing a drop in mortgage deals and cash sales. However, we believe the danger of a lasting migrant outflow and a serious downturn in the property sector is low.

As a long lasting US-Iran deal takes shape, the fallout from the conflict has tightened up local monetary conditions, exposing vulnerabilities through capital outflows, wider bond spreads, and weaker investor sentiment. Most GCC sovereigns bring relatively little debt and funding dangers are for that reason restricted in the UAE, the central bank's liquidity management has eased instant issues.

That stated, Bahrain has had the ability to depend on support from neighbours, consisting of Saudi Arabia and the UAE, and it effectively raised $1bn from an oversubscribed sovereign bond sale this month, marking the very first offering from the area since the war started. High-frequency financial information highlight the strain on local public financial resources from the conflict.

ANSR July GCC PRs 50DR+

The 2026 Investment Landscape in Arabia

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 profits and a rise in costs, especially on subsidies, reflecting contingency outlays connected to the local environment and an acceleration of Vision 2030 costs. In Qatar, the crisis brought oil and gas income to a halt, swelling the deficit spending to the biggest because 2017.

GCC inflation dynamics remain unequal, with food rates the main source of upward pressure and inflation in this category conditioning in Kuwait, Oman and Qatar. By contrast, food inflation remains fairly controlled in Saudi Arabia, most likely showing the mitigating effect of its larger domestic food production base and greater supply-chain durability.

We continue to view price pressures as largely temporal instead of indicative of a sustained inflationary cycle. Appropriately, we anticipate average inflation to reduce to 2.1% y/y in 2027 as short-term supply-side pressures dissipate. With near-term inflation raised and transit through the Strait likely set to resume slowly, we anticipate the US Federal Reserve to keep interest rates on hold until December, and regional rate policies to follow fit.

We expect Iran's GDP to diminish by 10.8% this year (we forecast a 9.4% contraction three months ago). Oil production and exports, which provide necessary earnings and FX inflows, have been cut by the United States marine blockade, while non-oil activity has actually been seriously 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 years of civil war. We anticipate GDP development to typical 9.6% over 2026-2027, supported by renewed financial investment, particularly in banking and energy, financial reforms, and the progressive resuming of regional trade links.

Future Middle Eastern Market Outlook

The World Bank has actually slashed its 2026 growth projection for Middle East economies, saying total GDP development in the area is anticipated to slow from an estimated 3.6% in January to 1.8% for 2026. The closure of the tactical Strait of Hormuz, and damage of energy and public facilities, had actually disrupted markets, increased financial volatility, and compromised 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 anticipates that the area's aggregate (leaving out the Iran) GDP development will slow down to 1.8 percent in 2026, down from 4.0 percent estimated for 2025. The 2026 projection has actually been reduced by 2.4 portion points considering that the January projections, showing the adverse results of the continuous conflict.

Saudi Arabia: Forecast was reduced by 1.2 portion points because January. Growth is now anticipated to slow from 4.3% in 2025 to 3.1% in 2026, keeping in mind that Saudi Arabia's outlook stays the strongest amongst Gulf economies. United Arab Emirates: Development projection for the UAE has actually fallen by 2.7 portion points given that January.

Qatar: Notably, development forecast for the Qatari economy has actually 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 approximated development of 5.3%, due to serious blockage to melted gas materials. Qatar is a crucial player in the worldwide energy market, with a worldwide market share of melted natural gas (LNG) materials ranging between 20% and 21%.

Kuwait relies entirely (100%) on the Strait of Hormuz to export its unrefined oil and derivatives. Closing the strait would suggest a complete shutdown of the nation's monetary lifeline, instantly halting profits inflows to the state budget. Bahrain: Growth projection for Bahrain's economy has actually decreased by 1.8 portion points since January.