Evaluating GCC Market Resilience for 2026

Residential or commercial property rates have come under pressure after a period of strong growth, with current information from the Dubai Land Department revealing a drop in home loan deals and money sales. However, we believe the risk of a lasting migrant outflow and an extreme recession in the realty sector is low.

As a lasting US-Iran offer takes shape, the fallout from the dispute has tightened local financial conditions, exposing vulnerabilities through capital outflows, larger bond spreads, and weaker investor sentiment. Many GCC sovereigns carry fairly little financial obligation and funding risks are therefore restricted in the UAE, the central bank's liquidity management has actually relieved instant issues.

That stated, Bahrain has actually been able to rely on support from neighbours, consisting of 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 area considering that the war began. High-frequency fiscal data highlight the stress on local public finances from the conflict.

ANSR July GCC PRs 50DR+

GCC Stock Market Patterns for 2026

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 earnings and a surge in costs, particularly on aids, reflecting contingency expenses connected to the regional environment and an acceleration of Vision 2030 costs. 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 costs the main source of upward pressure and inflation in this category conditioning in Kuwait, Oman and Qatar. By contrast, food inflation remains relatively controlled in Saudi Arabia, most likely reflecting the mitigating result of its larger domestic food production base and higher supply-chain durability.

We continue to view price pressures as largely transitory instead of indicative of a continual inflationary cycle. Appropriately, we expect average inflation to reduce to 2.1% y/y in 2027 as momentary supply-side pressures dissipate. With near-term inflation raised and transit through the Strait most likely set to resume slowly, we expect the United States Federal Reserve to keep rates of interest on hold until December, and local 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 supply necessary income and FX inflows, have been reduced by the United States marine blockade, while non-oil activity has actually been seriously hit. In Iraq, oil exports have collapsed to a drip 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 worldwide economy after more than a years of civil war. We expect GDP development to typical 9.6% over 2026-2027, supported by renewed investment, especially in banking and energy, monetary reforms, and the steady reopening of regional trade links.

Driving Economic Growth via Strategic Diversification

The World Bank has actually slashed its 2026 growth forecast for Middle East economies, saying overall GDP development in the area 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 damage of energy and public facilities, had interrupted markets, increased financial volatility, and weakened 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 development will decelerate to 1.8 percent in 2026, down from 4.0 percent estimated for 2025. The 2026 forecast has actually been reduced by 2.4 portion points given that the January projections, reflecting the negative effects of the ongoing conflict.

Saudi Arabia: Forecast was reduced by 1.2 portion points because 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 strongest amongst Gulf economies. United Arab Emirates: Growth projection for the UAE has actually fallen by 2.7 portion points given that January.

Qatar: Notably, development projection for the Qatari economy has actually seen a sharp decrease of 11.0 percentage points given that January. The economy is now anticipated to tape-record a contraction of 5.7%, down from an estimated growth of 5.3%, due to extreme obstruction to liquefied gas supplies. Qatar is a key player in the worldwide energy market, with a worldwide market share of melted natural gas (LNG) products ranging in between 20% and 21%.

Kuwait relies totally (100%) on the Strait of Hormuz to export its crude oil and derivatives. Closing the strait would indicate a total shutdown of the country's financial lifeline, right away halting profits inflows to the state budget. Bahrain: Growth projection for Bahrain's economy has declined by 1.8 percentage points given that January.