Key Equity Capital Insights for Regional Investors

Property costs have actually come under pressure after a period of strong growth, with current information from the Dubai Land Department showing a drop in mortgage transactions and money sales. We think the threat of a long lasting migrant outflow and a serious slump in the genuine estate sector is low.

As a lasting US-Iran deal takes shape, the fallout from the conflict has actually tightened local monetary conditions, exposing vulnerabilities through capital outflows, broader bond spreads, and weaker investor belief. Most GCC sovereigns carry fairly little financial obligation and financing dangers are for that reason limited in the UAE, the reserve bank's liquidity management has actually reduced immediate concerns.

That stated, Bahrain has actually had the ability to depend on assistance from neighbours, including Saudi Arabia and the UAE, and it effectively raised $1bn from an oversubscribed sovereign bond sale this month, marking the first offering from the region given that the war started. High-frequency fiscal data highlight the strain on regional public financial resources from the conflict.

ANSR July GCC PRs 50DR+

Securing Middle East Portfolios against 2026 Shifts

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 earnings and a rise in costs, particularly on subsidies, reflecting contingency investments tied to the regional environment and an acceleration of Vision 2030 spending. In Qatar, the crisis brought oil and gas income to a stop, swelling the deficit spending to the biggest since 2017.

GCC inflation characteristics remain uneven, 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 controlled in Saudi Arabia, likely showing the mitigating effect of its bigger domestic food production base and higher supply-chain durability.

We continue to see rate pressures as largely temporal instead of a sign of a continual inflationary cycle. Appropriately, we expect typical inflation to relieve to 2.1% y/y in 2027 as short-lived supply-side pressures dissipate. With near-term inflation elevated and transit through the Strait most likely set to resume gradually, we expect the US Federal Reserve to keep rates of interest on hold till December, and local rate policies to follow suit.

We anticipate Iran's GDP to diminish by 10.8% this year (we forecast a 9.4% contraction three months ago). Oil production and exports, which offer essential revenue and FX inflows, have actually been reduced by the US marine blockade, while non-oil activity has actually been badly hit. In Iraq, oil exports have actually collapsed to a trickle 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 years of civil war. We prepare for GDP growth to typical 9.6% over 2026-2027, supported by restored investment, especially in banking and energy, monetary reforms, and the progressive reopening of local trade links.

Key Economic Shifts in 2026

The World Bank has slashed its 2026 growth projection for Middle East economies, stating 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 strategic Strait of Hormuz, and damage of energy and public infrastructure, had disrupted 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 region's aggregate (excluding the Iran) GDP growth will decelerate to 1.8 percent in 2026, down from 4.0 percent estimated for 2025. The 2026 projection has been downgraded by 2.4 percentage points considering that the January forecasts, reflecting the negative results of the continuous conflict.

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

Qatar: Significantly, growth forecast for the Qatari economy has seen a sharp decrease of 11.0 portion points given that January. The economy is now expected to record a contraction of 5.7%, below an approximated growth of 5.3%, due to serious obstruction to melted gas supplies. Qatar is an essential gamer in the global energy market, with a global market share of liquefied 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. Subsequently, closing the strait would suggest a total shutdown of the country's financial lifeline, right away halting income inflows to the state budget. Bahrain: Growth projection for Bahrain's economy has declined by 1.8 portion points since January.