Upcoming Regional Economic Projections

Home costs have actually come under pressure after a period of strong growth, with current data from the Dubai Land Department showing a drop in home mortgage transactions and cash sales. However, we believe the danger of an enduring migrant outflow and a serious recession in the realty sector is low.

As a long lasting US-Iran offer takes shape, the fallout from the conflict has actually tightened up local financial conditions, exposing vulnerabilities through capital outflows, larger bond spreads, and weaker financier sentiment. Most GCC sovereigns bring fairly little financial obligation and financing dangers are for that reason restricted in the UAE, the reserve bank's liquidity management has relieved instant concerns.

That stated, Bahrain has actually had the ability to depend 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 region because the war started. High-frequency fiscal data highlight the pressure on local public finances from the dispute.

ANSR July GCC PRs 50DR+

Evaluating Regional Investment Resilience in 2026

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 surge in costs, especially on aids, showing contingency expenses connected to the regional environment and a velocity of Vision 2030 spending. In Qatar, the crisis brought oil and gas profits to a stop, swelling the deficit spending to the largest because 2017.

GCC inflation characteristics remain uneven, with food prices the main source of upward pressure and inflation in this classification conditioning in Kuwait, Oman and Qatar. By contrast, food inflation stays fairly suppressed in Saudi Arabia, most likely reflecting the mitigating result of its bigger domestic food production base and higher supply-chain resilience.

We continue to see price pressures as largely temporal rather than a sign of a continual inflationary cycle. Accordingly, we anticipate typical inflation to relieve to 2.1% y/y in 2027 as momentary supply-side pressures dissipate. With near-term inflation raised and transit through the Strait likely set to resume gradually, we expect the US Federal Reserve to keep rates of interest on hold up until December, and regional rate policies to follow match.

We anticipate Iran's GDP to shrink by 10.8% this year (we forecast a 9.4% contraction 3 months ago). Oil production and exports, which supply necessary income and FX inflows, have been cut by the US naval blockade, while non-oil activity has actually been severely hit. In Iraq, oil exports have collapsed to a trickle and we're forecasting 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 global economy after more than a years of civil war. We prepare for GDP growth to average 9.6% over 2026-2027, supported by renewed investment, especially in banking and energy, financial reforms, and the progressive resuming of regional trade links.

Foreign Capital Prospects across the Middle East

The World Bank has slashed its 2026 development forecast for Middle East economies, stating overall GDP development 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 infrastructure, had actually interrupted markets, increased monetary volatility, and compromised the 2026 growth 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 Poverty Outlook anticipates that the area's aggregate (excluding the Iran) GDP growth 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 percentage points given that the January forecasts, showing the negative effects of the ongoing dispute.

Saudi Arabia: Forecast was reduced by 1.2 percentage 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 remains the greatest among Gulf economies. United Arab Emirates: Development projection for the UAE has actually fallen by 2.7 portion points since January.

Qatar: Notably, development forecast for the Qatari economy has seen a sharp decline of 11.0 percentage points given that January. The economy is now anticipated to record a contraction of 5.7%, below an estimated growth of 5.3%, due to serious blockage to melted gas supplies. Qatar is an essential player in the worldwide energy market, with an international market share of liquefied natural gas (LNG) supplies ranging between 20% and 21%.

Kuwait relies entirely (100%) on the Strait of Hormuz to export its crude oil and derivatives. Closing the strait would mean a total shutdown of the nation's financial lifeline, instantly stopping earnings inflows to the state spending plan. Bahrain: Development projection for Bahrain's economy has actually decreased by 1.8 portion points given that January.