International Capital Prospects across the GCC

Residential or commercial property prices have actually come under pressure after a period of strong development, with current information from the Dubai Land Department revealing a drop in mortgage deals and money sales. However, we think the threat of a lasting migrant outflow and a serious downturn in the property sector is low.

As a lasting US-Iran offer takes shape, the fallout from the conflict has actually tightened regional financial conditions, exposing vulnerabilities through capital outflows, wider bond spreads, and weaker financier sentiment. A lot of GCC sovereigns carry reasonably little financial obligation and financing dangers are for that reason limited in the UAE, the central bank's liquidity management has reduced immediate issues.

That said, Bahrain has had the ability to rely on support from neighbours, including 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 region given that the war began. High-frequency fiscal information underscore the stress on regional public finances from the dispute.

ANSR July GCC PRs 50DR+

Key International Investment Avenues for the GCC Market

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 income and a rise in costs, particularly on aids, reflecting contingency outlays connected to the regional environment and an acceleration of Vision 2030 costs. In Qatar, the crisis brought oil and gas earnings to a stop, swelling the deficit spending to the largest given that 2017.

GCC inflation dynamics stay irregular, 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 reasonably suppressed in Saudi Arabia, likely reflecting the mitigating result of its larger domestic food production base and higher supply-chain durability.

We continue to view cost pressures as largely transitory rather than indicative of a sustained inflationary cycle. Appropriately, we expect average inflation to alleviate 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 anticipate the United States Federal Reserve to keep interest rates on hold till 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 3 months ago). Oil production and exports, which offer important revenue and FX inflows, have been reduced by the United States naval blockade, while non-oil activity has been severely 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 prepare for GDP development to average 9.6% over 2026-2027, supported by restored financial investment, especially in banking and energy, monetary reforms, and the steady reopening of local trade links.

Top Foreign Investment Prospects in the GCC Region

The World Bank has actually slashed its 2026 development projection for Middle East economies, saying general 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 destruction of energy and public infrastructure, had actually interfered with markets, increased financial volatility, and compromised the 2026 development outlook, the World Bank Group stated 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 decrease to 1.8 percent in 2026, below 4.0 percent approximated for 2025. The 2026 projection has been downgraded by 2.4 portion points given that the January projections, reflecting the adverse results of the ongoing conflict.

Saudi Arabia: Projection was devalued by 1.2 percentage points because 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 amongst Gulf economies. United Arab Emirates: Development projection for the UAE has fallen by 2.7 portion points considering that January.

Qatar: Especially, development projection for the Qatari economy has seen a sharp decrease of 11.0 portion points because January. The economy is now expected to tape a contraction of 5.7%, below an approximated growth of 5.3%, due to extreme obstruction to liquefied gas supplies. Qatar is an essential player in the worldwide energy market, with a global market share of liquefied gas (LNG) materials ranging between 20% and 21%.

Kuwait relies totally (100%) on the Strait of Hormuz to export its unrefined oil and derivatives. Closing the strait would suggest a total shutdown of the nation's financial lifeline, right away stopping earnings inflows to the state budget plan. Bahrain: Growth forecast for Bahrain's economy has actually declined by 1.8 percentage points because January.