Mastering Investment Strategies for a Global Economy

Home rates have actually come under pressure after a duration of strong growth, with recent data from the Dubai Land Department showing a drop in home mortgage transactions and cash sales. Nevertheless, we believe the threat of an enduring migrant outflow and a severe recession in the realty sector is low.

As an enduring US-Iran offer takes shape, the fallout from the dispute has tightened local monetary conditions, exposing vulnerabilities through capital outflows, wider bond spreads, and weaker financier sentiment. Many GCC sovereigns carry relatively little debt and funding risks are therefore restricted in the UAE, the reserve bank's liquidity management has eased immediate issues.

That stated, Bahrain has actually been able 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 first offering from the region since the war began. High-frequency fiscal data highlight the stress on regional public finances from the conflict.

ANSR July GCC PRs 50DR+

Positioning Middle East Portfolios for 2026 Shifts

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 spending, particularly on subsidies, reflecting contingency investments tied to the local environment and a velocity of Vision 2030 spending. In Qatar, the crisis brought oil and gas revenue to a halt, swelling the budget deficit to the largest considering that 2017.

GCC inflation characteristics stay uneven, with food rates the main source of upward pressure and inflation in this category fortifying in Kuwait, Oman and Qatar. By contrast, food inflation remains relatively controlled in Saudi Arabia, most likely reflecting the mitigating effect of its bigger domestic food production base and greater supply-chain strength.

We continue to see rate pressures as mainly temporal rather than a sign of a sustained inflationary cycle. Appropriately, we expect average inflation to relieve to 2.1% y/y in 2027 as temporary supply-side pressures dissipate. With near-term inflation raised and transit through the Strait likely set to resume gradually, we expect the United States Federal Reserve to keep interest rates on hold till December, and regional rate policies to do the same.

We anticipate Iran's GDP to diminish by 10.8% this year (we anticipate a 9.4% contraction three months ago). Oil production and exports, which supply essential income and FX inflows, have actually been cut by the United States naval blockade, while non-oil activity has been severely struck. In Iraq, oil exports have 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 worldwide economy after more than a years of civil war. We expect 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 regional trade links.

Navigating Capital Diversification for a 2026 Economy

The World Bank has actually slashed its 2026 growth projection for Middle East economies, stating overall GDP growth in the region is anticipated to slow from an approximated 3.6% in January to 1.8% for 2026. The closure of the tactical Strait of Hormuz, and destruction of energy and public facilities, had actually interrupted markets, increased financial volatility, and damaged 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 (omitting the Iran) GDP growth will decrease 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 given that the January forecasts, showing the unfavorable impacts of the continuous conflict.

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

Qatar: Notably, development projection for the Qatari economy has seen a sharp decline of 11.0 portion points since January. The economy is now expected to record a contraction of 5.7%, down from an estimated development of 5.3%, due to severe blockage to melted gas products. Qatar is a crucial player in the worldwide energy market, with a global market share of liquefied natural gas (LNG) products varying between 20% and 21%.

Kuwait relies totally (100%) on the Strait of Hormuz to export its petroleum and derivatives. Subsequently, closing the strait would suggest a total shutdown of the nation's financial lifeline, right away stopping profits inflows to the state spending plan. Bahrain: Growth projection for Bahrain's economy has actually declined by 1.8 percentage points since January.