Essential Stock Market Insights for GCC Investors

Home costs have actually come under pressure after a duration of strong growth, with recent data from the Dubai Land Department revealing a drop in home mortgage deals and cash sales. Nevertheless, we think the danger of a long lasting migrant outflow and a severe recession in the real estate sector is low.

As a lasting US-Iran offer takes shape, the fallout from the dispute has actually tightened local financial conditions, exposing vulnerabilities through capital outflows, larger bond spreads, and weaker financier belief. The majority of GCC sovereigns bring fairly little financial obligation and financing threats are for that reason limited in the UAE, the reserve bank's liquidity management has relieved instant concerns.

That said, Bahrain has been able to count 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 considering that the war began. High-frequency fiscal data highlight the strain on local public finances from the dispute.

ANSR July GCC PRs 50DR+

Foreign Investment Prospects across the GCC

In Saudi Arabia, the spending plan deficit more than doubled to SAR125.7 bn, or about 9% of GDP in Q1, driven by a decline in oil income and a surge in costs, especially on aids, reflecting contingency outlays connected to the regional environment and an acceleration of Vision 2030 spending. In Qatar, the crisis brought oil and gas earnings to a halt, swelling the deficit spending to the biggest considering that 2017.

GCC inflation characteristics remain irregular, with food rates the primary source of upward pressure and inflation in this classification conditioning in Kuwait, Oman and Qatar. By contrast, food inflation remains relatively controlled in Saudi Arabia, likely reflecting the mitigating effect of its larger domestic food production base and higher supply-chain strength.

We continue to view rate pressures as mainly transitory rather than indicative of a sustained inflationary cycle. Accordingly, we expect typical inflation to alleviate 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 gradually, we expect the United States Federal Reserve to keep rates of interest on hold up until December, and regional rate policies to follow fit.

We anticipate Iran's GDP to shrink by 10.8% this year (we anticipate a 9.4% contraction three months ago). Oil production and exports, which provide vital revenue and FX inflows, have been reduced by the US marine blockade, while non-oil activity has been severely 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 international economy after more than a years of civil war. We prepare for GDP growth to typical 9.6% over 2026-2027, supported by renewed investment, especially in banking and energy, monetary reforms, and the gradual reopening of regional trade links.

Advancing Economic Growth through Strategic Diversification

The World Bank has slashed its 2026 growth projection for Middle East economies, stating total GDP growth in the region 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 damage of energy and public facilities, had interrupted markets, increased financial volatility, and weakened 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 (excluding the Iran) GDP development will decelerate to 1.8 percent in 2026, below 4.0 percent approximated for 2025. The 2026 forecast has been reduced by 2.4 portion points given that the January projections, showing the unfavorable impacts of the ongoing dispute.

Saudi Arabia: Forecast was downgraded by 1.2 percentage points since January. Development 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 strongest amongst Gulf economies. United Arab Emirates: Development forecast for the UAE has fallen by 2.7 portion points given that January.

Qatar: Significantly, growth projection for the Qatari economy has actually seen a sharp decline of 11.0 percentage points considering that January. The economy is now anticipated to tape-record a contraction of 5.7%, down from an approximated growth of 5.3%, due to severe blockage to melted gas materials. Qatar is an essential gamer in the international energy market, with a worldwide market share of liquefied natural gas (LNG) products ranging 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 monetary lifeline, immediately stopping earnings inflows to the state spending plan. Bahrain: Development forecast for Bahrain's economy has actually declined by 1.8 percentage points because January.