THIS MORNING: Economists pencil in a bigger contraction for GCC economies + Dana Gas shuts down main facilities at Khor Mor

Good morning, everyone. We kick off this week with “a glass half full” kind of morning, depending on which economist you ask.

Our Big Story Today is that the IMF is sounding relatively upbeat (all things considered) on our economy, expecting only a “slightly lower” GDP for 2026, before a strong recovery next year. That’s a rosier read than the one coming from a separate poll of economists, who gave most GCC economies another markdown for the year as the war drags on. The UAE, at least, is expected to hold roughly steady.

However, the real economy isn’t waiting around for the forecasts to sort themselves out: Non-oil foreign trade hit a record AED 1.94 tn in 1H, with exports leading the charge, as the UAE pushes ahead with its CEPA agenda.

Economists pencil in contraction for GCC economies

Surprising exactly nobody, the region’s 2026 just got marked down again: Most GCC economies will contract more sharply this year than forecast three months ago before rebounding in 2027, according to a Reuters poll of economists out over the weekend, as hopes fade that the war will soon end.

Kuwait and Qatar took the deepest downgrades — the poll sees both economies shrinking 8.1% this year. The UAE will hold steady (-0.5%), respondents said, while Saudi (+1.4%) and Oman (+3.1%) will both eke out some growth.

Bond investors understand the calculus: The average sovereign risk premium across Middle Eastern governments jumped roughly 20 bps to 402 bps over Treasuries in the week since the ceasefire broke down, Bloomberg reports — the widest in almost four years, and on pace for the fastest YTD widening since 2018.

Smaller fee pool

The UAE still generated more than half of MENA investment banking fees in the first half of 2026 — but the regional pool shrank sharply. MENA investment banking fees fell 19% y-o-y to a three-year low of USD 757.1 mn, according to LSEG data carried by Zawya. The UAE accounted for 55% of the total, ahead of Saudi Arabia at 25% and Qatar at 7%, as the US-Iran conflict weighed on dealmaking.

Where it hurt: Equity capital markets took the biggest hit, with equity underwriting fees falling 57% y-o-y to a five-year low of USD 69.5 mn as IPOs and follow-on offerings slowed in the second quarter. Debt capital markets were the relative bright spot, with underwriting fees broadly flat at USD 297 mn, while completed M&A advisory fees fell 19% to USD 203.5 mn and syndicated lending fees dropped 16% to USD 187.4 mn.

The league table shifted: Global banks led the regional wallet, with JPMorgan taking the top spot with USD 71 mn in fees, up 21% y-o-y, and a 9.4% share. Citi ranked second with USD 56.1 mn, while HSBC fell to third after its fees dropped 48% to USD 36.7 mn. Barclays was the outlier, with its fees jumping 240% y-o-y to USD 33.1 mn. UAE lenders including Emirates NBD and First Abu Dhabi Bank remained part of the regional fee race but did not break into the top three, according to the ranking.

Dana’s Khor Mor out again

Dana Gas has shut down the main production facilities at Iraq’s Khor Mor gas field after receiving what it described as “credible security threats” amid the escalation in the region, according to a disclosure (pdf). The company did not disclose the nature of the threats or say when production could resume.

BACKGROUND- This is not the field’s first security-driven disruption. While operations remained unaffected after a drone strike in February last year, a subsequent strike on a storage tank in November halted production and caused extensive power outages. The field was also shut for two weeks after the regional conflict started heating up in March before resuming operations in April.

Gulf flight disruptions are back

Cancellations are spreading across the UAE amid regional escalations — Etihad canceled its Abu Dhabi-Kuwait services on 19-20 July; Emirates and Air Arabia scrapped several flights connecting Kuwait with Dubai, Sharjah, and Abu Dhabi; and flydubai canceled one Dubai-Abha service as disruptions at the Saudi airport continued, Gulf News reports.

Foreign carriers are pulling back again: Air Astana halted UAE flights only days after restarting them, while British Airways, Singapore Airlines, and Air Canada have pushed their Dubai returns to October, The National reports. Lufthansa and Swiss are holding off until September. The European Union Aviation Safety Agency, meanwhile, is advising covered carriers to avoid the airspace of Bahrain, Kuwait, Qatar, the UAE, and part of the Gulf of Oman until at least 29 July, with some detours adding 1-3 hours to flight times, according to a travel advisory.

What’s driving the cancellations? The US completed an eighth consecutive night of strikes on Iran after an Iranian attack on a US base in Jordan killed two American troops and left another missing. Iran has since launched fresh attacks on targets in Kuwait and Bahrain, activating air defenses and prompting air-raid sirens in Manama.

Abu Dhabi’s property surge

AED 117 bn — that was the value of Abu Dhabi real estate transactions in 1H 2026, up 112% y-o-y, according to Abu Dhabi Real Estate Center (Adrec) data picked up by the Abu Dhabi Media Office. Transaction volumes rose 61.7% and sales jumped 163.7% in value to AED 86.1 bn across 16.8k transactions. Mortgage transactions reached AED 26.7 bn across 8.9k transactions, up more than 33%.

Foreign money is moving faster: Foreign direct investment into Abu Dhabi real estate reached AED 13.8 bn in the first half, up 309% y-o-y — already exceeding the 2025 full-year total. Non-resident investors from 116 nationalities bought into the market, up from 82 a year earlier, with the UK, China, Russia, the US, Germany, and France among the leading sources.

Investment zones are becoming the growth engine. Abu Dhabi’s zones attracted AED 75 bn in investment in the first half, up 181% from a year earlier, while Adrec approved eight new investment zones, bringing the total to 50. The question now is whether new zones and projects can keep supply moving fast enough to absorb that foreign and institutional demand.

The results come on the back of solid 1Q momentum for Abu Dhabi real estate, which recorded AED 66 bn worth of transactions as demand from end-users and long-term investors continued to support activity. At the time, analysts had penciled in a slight cooldown for 2Q due to what they predicted would be cooled investor sentiment and longer transaction timelines. However, the emirate later moved to freeze rents across residential, commercial, and industrial properties to preserve long-term market stability.

PSA

WEATHER- Temperatures will hit highs of 42°C in Dubai today and 45°C in Abu Dhabi, before dipping to lows of 33°C and 32°C, according to our favorite weather app.

The big story abroad

International dailies are calmer than usual today, with the latest updates in the regional war leading the news cycle.

The US military launched another round of airstrikes against Iranian targets yesterday, marking its ninth consecutive night of strikes, the US Central Command said. The latest salvo follows the deaths of three US servicemembers this week in Jordan and Iraq.

Taiwan’s semiconductor giant TSMC is pouring another USD 100 bn into expanding its Arizona facilities, citing surging, multi-year demand for AI hardware. A major supplier of chipmaker Nvidia, TSMC reported record 2Q results last week and has not ruled out the possibility of issuing new bonds should market conditions prove favorable, its CFO Wendell Huang said.

Spain brought home its second-ever World Cup trophy after triumphing 1-0 over Argentina. The New Jersey showdown proved a stalemate until substitute Ferran ​Torres secured the winning goal in extra time.

Meanwhile at the box office, Christopher Nolan’s The Odyssey brought in USD 264 mn globally in its opening weekend — the director’s highest-grossing debut so far. The film — the first ever to be shot entirely on Imax cameras — flaunts an all-star cast and garnered widespread critical acclaim.

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