Future-Proofing GCC Portfolios for 2026 Trends

Home costs have come under pressure after a period of strong growth, with recent information from the Dubai Land Department revealing a drop in home loan deals and cash sales. Nonetheless, we think the danger of an enduring migrant outflow and a serious slump in the property sector is low.

As a lasting US-Iran offer takes shape, the fallout from the conflict has tightened up regional financial conditions, exposing vulnerabilities through capital outflows, larger bond spreads, and weaker financier sentiment. Most GCC sovereigns carry fairly little debt and financing risks are for that reason limited in the UAE, the main bank's liquidity management has actually minimized instant issues.

That stated, Bahrain has actually been able to rely 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 given that the war started. High-frequency fiscal data highlight the strain on regional public finances from the conflict.

ANSR July GCC PRs 50DR+

Accelerating Economic Success via Strategic Diversification

In Saudi Arabia, the spending plan deficit more than doubled to SAR125.7 bn, or about 9% of GDP in Q1, driven by a decrease in oil revenue and a rise in spending, especially on subsidies, reflecting contingency outlays connected to the local environment and an acceleration of Vision 2030 costs. In Qatar, the crisis brought oil and gas revenue to a halt, swelling the budget deficit to the biggest because 2017.

GCC inflation dynamics stay irregular, with food rates the main source of upward pressure and inflation in this classification fortifying in Kuwait, Oman and Qatar. By contrast, food inflation stays reasonably subdued in Saudi Arabia, likely reflecting the mitigating result of its larger domestic food production base and greater supply-chain strength.

We continue to view rate pressures as mainly temporal rather than a sign of a continual inflationary cycle. Accordingly, we anticipate average inflation to relieve to 2.1% y/y in 2027 as short-term 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 rate of interest on hold till December, and local rate policies to do the same.

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 cut by the United States marine blockade, while non-oil activity has been significantly hit. In Iraq, oil exports have actually collapsed to a trickle 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 international economy after more than a decade of civil war. We expect GDP development to average 9.6% over 2026-2027, supported by renewed financial investment, especially in banking and energy, financial reforms, and the steady resuming of local trade links.

Emerging Equity Market Trends in 2026

The World Bank has slashed its 2026 growth projection for Middle East economies, saying general GDP growth in the area 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 interfered with markets, increased financial volatility, and deteriorated the 2026 development outlook, the World Bank Group said 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 (leaving out the Iran) GDP development will slow down to 1.8 percent in 2026, below 4.0 percent approximated for 2025. The 2026 forecast has actually been downgraded by 2.4 portion points since the January forecasts, reflecting the unfavorable impacts of the ongoing conflict.

Saudi Arabia: Projection was devalued by 1.2 percentage points given that January. Growth is now expected to slow from 4.3% in 2025 to 3.1% in 2026, keeping in mind that Saudi Arabia's outlook stays the strongest among Gulf economies. United Arab Emirates: Growth projection for the UAE has actually fallen by 2.7 percentage points because January.

Qatar: Especially, development forecast for the Qatari economy has actually seen a sharp decrease of 11.0 percentage points considering that January. The economy is now anticipated to record a contraction of 5.7%, below an approximated growth of 5.3%, due to severe blockage to liquefied gas supplies. Qatar is a key player in the global energy market, with a global market share of liquefied natural gas (LNG) materials varying between 20% and 21%.

Kuwait relies completely (100%) on the Strait of Hormuz to export its petroleum and derivatives. Consequently, closing the strait would imply a total shutdown of the nation's financial lifeline, right away halting revenue inflows to the state budget. Bahrain: Growth projection for Bahrain's economy has declined by 1.8 percentage points because January.