Macroeconomic Summary
The UAE economy enters 2026 from a position of relative strength. Real GDP growth in 2024 reached an estimated 3.9%, with non-oil sectors expanding at 5.6% while hydrocarbon output contracted modestly under OPEC+ production discipline. The economy has demonstrated resilience to global headwinds, supported by robust domestic demand, sustained tourism inflows, and continued FDI attraction.
Consensus projections for 2025 and 2026 point to acceleration as oil production quotas are progressively relaxed and non-oil momentum continues.
GDP Growth Projections
| Institution | 2024 Est. (%) | 2025 Forecast (%) | 2026 Forecast (%) |
|---|---|---|---|
| IMF | 3.9 | 4.2 | 4.5 |
| World Bank | 3.8 | 4.0 | 4.3 |
| CBUAE | 4.0 | 4.4 | 4.6 |
| S&P Global | 3.9 | 4.1 | 4.4 |
| Emirates NBD | 4.0 | 4.3 | 4.5 |
| Consensus Average | 3.9 | 4.2 | 4.5 |
The convergence of institutional forecasts around 4.2% for 2025 and 4.5% for 2026 reflects confidence in the underlying growth trajectory. The upside potential in 2026 derives primarily from expected OPEC+ quota relaxation, which could add 0.3-0.5 percentage points to headline GDP growth through expanded oil production.
Sectoral Growth Forecasts (2025-2026)
| Sector | 2025 Forecast (%) | 2026 Forecast (%) | Key Driver |
|---|---|---|---|
| Oil & Gas | 1.2 | 3.8 | OPEC+ quota adjustments |
| Financial Services | 7.4 | 7.8 | Credit growth, capital markets |
| Technology & Digital | 13.2 | 14.8 | AI adoption, data centres |
| Tourism & Hospitality | 8.6 | 7.2 | Events calendar, capacity expansion |
| Manufacturing | 6.8 | 7.4 | Operation 300bn investments |
| Real Estate | 5.4 | 4.8 | Demand normalisation |
| Transport & Logistics | 5.1 | 5.6 | Trade volume expansion |
| Wholesale & Retail | 4.2 | 4.6 | Population and income growth |
Leading Indicators
Several high-frequency indicators support the positive growth outlook.
| Indicator | Latest Reading | Trend | Signal |
|---|---|---|---|
| PMI (IHS Markit UAE) | 56.8 (Jan 2026) | Expanding | Positive |
| Tourist arrivals (YoY %) | +11.4 (Q4 2025) | Accelerating | Positive |
| Non-oil export growth (YoY %) | +8.2 (Q4 2025) | Stable | Positive |
| Bank credit growth (YoY %) | +9.6 (Dec 2025) | Accelerating | Positive |
| New company registrations (YoY %) | +14.2 (Q4 2025) | Strong | Positive |
| Real estate transactions (Dubai, YoY %) | +6.8 (Q4 2025) | Moderating | Neutral |
| Consumer confidence index | 124.3 (Q4 2025) | Rising | Positive |
The PMI has remained above the 50.0 expansion threshold for over three years, indicating sustained private-sector activity. Bank credit growth exceeding 9% reflects both corporate investment demand and consumer confidence.
Risk Assessment
| Risk Factor | Probability | Impact | Mitigation |
|---|---|---|---|
| Global recession | Low-moderate | High | Fiscal buffers, SWF reserves |
| Oil price collapse (<USD 50) | Low | High | Diversification, fiscal reserves |
| Geopolitical escalation (regional) | Moderate | Moderate-high | Diplomatic positioning, logistics resilience |
| US dollar strength | Moderate | Moderate | AED peg limits policy response |
| Real estate correction | Low-moderate | Moderate | Macroprudential controls |
| Global trade fragmentation | Moderate | Moderate | CEPA network, hub positioning |
| Talent supply constraints | Moderate | Moderate | Visa reforms, education investment |
The most significant downside risk is a global recession triggered by persistent inflationary pressures or financial market dislocation. The UAE’s extensive fiscal buffers, including sovereign wealth fund assets exceeding USD 1.5 trillion across ADIA, Mubadala, and ADQ, provide substantial capacity to sustain counter-cyclical spending through a downturn.
Regional geopolitical risk remains an ambient factor. While the UAE has maintained a policy of de-escalation and diversified diplomatic engagement, proximity to areas of instability introduces tail risk to investor confidence and supply chain continuity.
Policy Levers
The government retains significant policy flexibility to support growth. Fiscal space permits expansion of infrastructure investment without debt sustainability concerns. The ongoing Federal Reserve easing cycle transmits lower interest rates through the peg, supporting credit and investment conditions. Regulatory reforms in progress, including expanded CEPA agreements and continued free zone development, provide structural tailwinds.
Assessment
The UAE economic outlook for 2025-2026 is firmly positive, with growth projected to accelerate modestly above 2024 levels. The combination of non-oil sector momentum, gradual OPEC+ relaxation, and supportive monetary conditions creates a favourable macroeconomic environment. Downside risks are real but manageable given the UAE’s institutional and financial resilience. The economy is well-positioned to maintain its trajectory toward Vision 2031 objectives.