Foreign Investment Opportunities across the Middle East

Residential or commercial property prices have actually come under pressure after a period of strong growth, with current information from the Dubai Land Department showing a drop in home loan transactions and money sales. We think the threat of an enduring migrant outflow and an extreme decline in the genuine estate sector is low.

As a lasting US-Iran deal takes shape, the fallout from the dispute has actually tightened regional monetary conditions, exposing vulnerabilities through capital outflows, wider bond spreads, and weaker financier sentiment. Many GCC sovereigns bring reasonably little financial obligation and funding dangers are for that reason restricted in the UAE, the main bank's liquidity management has actually alleviated instant concerns.

That said, Bahrain has been able to rely on assistance from neighbours, consisting of Saudi Arabia and the UAE, and it effectively raised $1bn from an oversubscribed sovereign bond sale this month, marking the first offering from the area given that the war started. High-frequency fiscal information underscore the strain on local public finances from the dispute.

ANSR July GCC PRs 50DR+

How Economic Shifts Will Shape GCC Markets

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 surge in costs, particularly on subsidies, reflecting contingency outlays tied to the local environment and an acceleration of Vision 2030 spending. In Qatar, the crisis brought oil and gas profits to a halt, swelling the deficit spending to the largest given that 2017.

GCC inflation characteristics stay irregular, with food costs the primary source of upward pressure and inflation in this category fortifying in Kuwait, Oman and Qatar. By contrast, food inflation stays relatively suppressed in Saudi Arabia, most likely reflecting the mitigating impact of its larger domestic food production base and greater supply-chain durability.

We continue to see rate pressures as mainly transitory instead of indicative of a continual inflationary cycle. Appropriately, we expect average inflation to reduce to 2.1% y/y in 2027 as momentary 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 interest rates on hold till December, and local rate policies to do the same.

We expect 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 necessary earnings and FX inflows, have been reduced by the United States marine blockade, while non-oil activity has actually been seriously struck. In Iraq, oil exports have actually collapsed to a drip and we're anticipating 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 worldwide economy after more than a decade of civil war. We anticipate GDP growth to average 9.6% over 2026-2027, supported by restored investment, particularly in banking and energy, monetary reforms, and the progressive resuming of local trade links.

Future Business Climate of the GCC

The World Bank has slashed its 2026 growth forecast for Middle East economies, stating general GDP growth 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 actually disrupted markets, increased financial 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 forecasts that the area's aggregate (excluding the Iran) GDP development will decelerate to 1.8 percent in 2026, below 4.0 percent estimated for 2025. The 2026 forecast has actually been downgraded by 2.4 percentage points given that the January projections, reflecting the negative results of the continuous dispute.

Saudi Arabia: Forecast was downgraded by 1.2 portion points considering that January. Growth is now anticipated to slow from 4.3% in 2025 to 3.1% in 2026, noting that Saudi Arabia's outlook stays the strongest amongst Gulf economies. United Arab Emirates: Growth forecast for the UAE has fallen by 2.7 percentage points considering that January.

Qatar: Significantly, growth projection for the Qatari economy has actually seen a sharp decline of 11.0 percentage points since January. The economy is now expected to tape-record a contraction of 5.7%, below an approximated development of 5.3%, due to serious obstruction to melted gas supplies. Qatar is an essential gamer in the worldwide energy market, with an international market share of melted natural gas (LNG) products varying in between 20% and 21%.

Kuwait relies entirely (100%) on the Strait of Hormuz to export its crude oil and derivatives. As a result, closing the strait would mean a complete shutdown of the country's financial lifeline, instantly halting profits inflows to the state spending plan. Bahrain: Development projection for Bahrain's economy has actually decreased by 1.8 percentage points considering that January.