Other BriefingsUAE Economy Set for 5% Growth in 2026: What It Means for Businesses and Investors
Following an estimated 5.4 percent expansion in 2025, the UAE economy is expected to grow by around 5 percent in 2026, supported by rising oil production, resilient non-oil activity, expansionary fiscal policy, and deepening trade integration.
The United Arab Emirates (UAE) is expected to remain one of the fastest-growing economies globally in 2026, as international institutions revise upward their outlook for the country’s economic performance. According to recent assessments by the World Bank and Standard Chartered, the UAE’s gross domestic product is projected to expand by around 5 percent in 2026, significantly outpacing global growth and outperforming several major economies.
The revised forecast reflects the UAE’s sustained economic momentum amid a challenging global environment marked by slowing growth, geopolitical uncertainty, and ongoing supply-chain realignments. While global GDP growth is expected to remain subdued, the UAE continues to benefit from strong non-oil sector expansion, robust trade activity, and resilient financial conditions, reinforcing its position as a regional hub for investment, logistics, and services.
As diversification efforts mature and the country’s role in global trade deepens, the 2026 outlook underscores the structural strengths of the UAE economy and its ability to attract capital and business activity despite external headwinds. For foreign investors and companies operating in the Middle East, the latest growth projections provide important signals on where economic opportunities are likely to concentrate in the coming year.
UAE 2025 economy growth in review
Economic performance in 2025 provided a strong base heading into 2026. Growth was broad-based, with both oil and non-oil sectors expanding at rates above historical norms.
- Total real GDP growth (2025 estimate): 5.4 percent
- Oil GDP growth: approximately 5 percent
- Non-oil GDP growth: approximately 5.5 percent
Oil-sector growth was driven primarily by higher production following changes in OPEC+ strategy, while non-oil activity benefited from population growth, strong domestic demand, infrastructure spending, and investment in services and technology.
Although the UAE has made significant progress in diversification, oil remains economically important. The oil sector now accounts for roughly 25 percent of GDP, down from more than 30 percent in 2013, while wholesale and retail trade is the second-largest sector, at roughly half the size of oil. This structure means that oil production trends continue to influence headline growth, even as non-oil activity increasingly drives employment and consumption.
UAE’s growth outlook for 2026
Looking ahead, real GDP growth is forecast at around 5.0 percent in 2026. While this represents a modest slowdown from 2025, it remains close to the UAE’s estimated potential growth rate and significantly exceeds global benchmarks.
For comparison:
- UAE: ~5.0 percent
- China: ~4.6 percent
- United States: ~2.3 percent
- Euro area: ~1.1 percent
This relative outperformance highlights the UAE’s resilience in an environment where global growth is increasingly constrained by structural and geopolitical factors.
Oil Sector: production gains continue, but at a slower pace
Oil GDP growth is expected to moderate slightly in 2026 to around 4.0 percent, following stronger gains in 2025. This reflects the fact that a substantial share of previously constrained supply has already been returned to the market.
Key production data and expectations:
- Average UAE oil output (2025): approximately 3.6 million barrels per day;
- Forecast average output (2026): around 3.7 million barrels per day;
- Year-on-year production growth (even at flat output): over 5 percent; and
- Medium-term capacity target: 5 million barrels per day by 2027 (ADNOC).
Even if production increases slow, ongoing investment in upstream capacity and condensates production creates upside risks to oil GDP forecasts. Importantly, oil revenues continue to underpin fiscal stability and support expansionary government spending.
Non-oil economy: diversification continues to deliver
The non-oil sector is expected to remain the primary engine of growth in 2026, with non-oil GDP projected to expand by around 5.3 percent, only slightly below 2025 levels.
Drivers of non-oil growth include:
- Rapid population growth across the emirates;
- Strong domestic consumption;
- Public and private investment in infrastructure; and
- Continued inflows of foreign businesses and professionals.
Growth dynamics vary by emirate. Abu Dhabi’s non-oil economy has expanded faster than Dubai’s in recent years and is expected to continue doing so in 2026, although growth across Dubai and the northern emirates remains solid.
Sectoral opportunities
For foreign investors and business leaders, part of understanding the UAE’s outlook is knowing which sectors are driving growth and where new opportunities are emerging. The UAE’s diversified economy offers multiple bright spots.
Financial services
The UAE’s financial sector is expanding on all cylinders. Banks are exceptionally liquid – deposit growth outpaced loan growth in 2025, giving UAE banks the lowest loan-to-deposit ratio in the GCC and plenty of capacity to lend. Private-sector credit was growing about 9 percent year-on-year by mid-2025, a sign of strong business confidence and demand for financing.
In 2026, local banks are poised to increase lending not only domestically (supporting SMEs, consumers, and project finance) but also across borders. With UAE interbank rates lower than some neighbors’, banks see opportunity to fund projects in markets like Saudi Arabia.
Beyond banking, Dubai is solidifying its status as a financial hub: its stock markets and DIFC financial center have attracted record listings and fund inflows, and new regulations for fintech, digital assets, and venture capital are spurring innovation. Insurance and asset management are also growth areas as the population and corporate activities expand.
All told, financial services benefit from the UAE’s stability and wealth: profit margins are healthy, and the introduction of corporate tax at 9 percent is not expected to deter banks or investors given the still-low tax environment. With global firms (from hedge funds to crypto exchanges) choosing the UAE as a base, the sector’s outlook is bright. For investors, this means opportunities in banking equities, fintech startups, and financial infrastructure providers.
Construction and real estate
Construction activity remains robust, underpinned by mega-projects and infrastructure expansion. The UAE is building for the future, and 2026 will see progress on initiatives like Etihad Rail, which will connect all emirates and link to Saudi Arabia, enhancing logistics. New highway networks, metro extensions, and port upgrades are underway to support trade growth. Additionally, the energy transition is fueling construction of renewable energy plants (such as solar farms in Al Dhafra and Mohammed bin Rashid Solar Park) and related infrastructure.
On the real estate side, the market has been booming since 2021. In 2025, Dubai recorded some of its highest-ever real estate transaction volumes, and property prices (especially in prime locations) surged by double digits. This momentum is expected to carry into 2026, albeit at a more sustainable pace. Demand is driven by population growth (in 2025, Dubai’s population exceeded 3.6 million), a resurgence of expatriate inflows (drawn by the UAE’s handling of the pandemic and new visas), and investors seeking safe-haven assets. Specifically:
- Residential real estate is buoyant, Developers are launching new villa communities and high-end apartments, many of which sell out off-plan.
- Commercial real estate is also recovering, with office occupancy up due to new business entrants. Risks exist – higher interest rates had begun to cool mortgage demand, and a wave of new supply in late 2026–2027 could cap rent increases.
But fundamentals remain solid. The government’s urban plans (such as the Dubai 2040 Master Plan) aim to sustainably grow cities with ample infrastructure. Real estate and construction will thus continue to be pillars of the economy, offering opportunities for contractors, property developers, building materials suppliers, and real estate investment trusts (REITs). Investors evaluating these sectors should note the UAE’s strong property laws and the government’s track record of intervening (with regulatory tweaks) to prevent severe booms and busts.
Tourism and hospitality
The UAE’s tourism sector is in the middle of a remarkable upswing. After the setback of 2020, visitor numbers roared back, Dubai welcomed 14.36 million international tourists in 2022 and continued the trend in 2023–2024, nearing pre-Covid peaks (Dubai had 16.7 million in 2019).
In 2025, growth persisted: hotel occupancy remained high and average daily rates strong, thanks to both leisure tourists and a revival of MICE (meetings, conferences) events. The outlook for 2026 is very positive:
- Dubai Expo 2020’s legacy site has been transformed into Expo City, hosting events and drawing tourists interested in sustainability and tech exhibits;
- Abu Dhabi is boosting cultural tourism with attractions like the Louvre Abu Dhabi and the upcoming Guggenheim museum; and
- New theme parks, such as SeaWorld Abu Dhabi (opened 2023) and other family entertainment centers, add to the UAE’s appeal for regional visitors.
Moreover, the UAE’s global connectivity gives it an edge: Emirates Airline and Etihad Airways have expanded flight routes, and plans are underway for a massive expansion of Al Maktoum International Airport in Dubai South to eventually become the world’s largest.
In 2026, the UAE will also benefit from major events, for example, if any international sports tournaments or exhibitions are hosted (the country has ambitions for events like the FIFA Club World Cup and has become a cricket hub). Tourism receipts are set to grow, and the sector’s contribution to GDP will rise accordingly.
The government’s strategy aims for US$122 billion in tourism GDP by 2031, nearly double current levels, by attracting 40 million hotel guests annually. Key markets remain India, Saudi Arabia, Europe, and increasingly China (as Chinese tour groups return post-pandemic).
For businesses, the flourishing tourism means opportunities in hotel development, tourist services, F&B, and retail. Notably, retail (malls, luxury stores) in the UAE is tightly linked to tourism, a continued influx of visitors bodes well for the retail and entertainment industry. One risk to monitor is global travel sentiment: any new health crisis or geopolitical issue can dampen long-haul travel, but barring that, the UAE’s reputation as a safe, high-quality destination should keep tourism on an upswing in 2026.
Healthcare and life sciences
The healthcare sector in the UAE is undergoing a transformation from regional player to global contender. Government spending on healthcare is rising and expected to reach 5 percent of GDP by 2029. In 2026, healthcare will see continued expansion of hospitals, clinics, and specialized medical facilities.
The goal is twofold: meet the needs of a growing and aging resident population, and establish the UAE as a medical tourism hub for overseas patients. Progress is evident – Abu Dhabi’s flagship Cleveland Clinic Abu Dhabi handled over one million patient encounters in 2024, with international patient visits jumping 35 percent as more people flew in for complex treatments.
Other hospital groups (including Mediclinic, NMC, and Burjeel) are investing in cutting-edge treatments, from robotic surgery to advanced oncology, to attract patients who might otherwise go to Europe or Asia for care.
Moreover, later in 2026, the UAE’s new mandatory health insurance schemes will further stimulate private healthcare demand.
Global pharmaceutical leaders such as GSK, Pfizer, and AstraZeneca have established regional headquarters and manufacturing operations in the UAE, attracted by fast-track regulatory approvals, advanced logistics infrastructure, and access to regional markets. The government’s Make it in the Emirates initiative is further accelerating domestic production of pharmaceuticals, vaccines, and medical devices, reducing import reliance while supporting industrial diversification and job creation.
Alongside manufacturing, the UAE is positioning itself at the forefront of health technology and biotechnology. Flagship initiatives include the National Genome Project, which has already sequenced more than 500,000 Emirati genomes, and the deployment of AI-driven healthcare applications, including early cancer detection and predictive diagnostics. These efforts underscore healthcare’s emergence as a strategic growth sector, backed by substantial public investment and increasing private capital participation.
Trade and logistics
As a historic trading hub, the UAE has long prioritized logistics, but it is now consolidating its position as a global logistics powerhouse. By 2026, the sector is expected to benefit from both sustained domestic investment and shifting geopolitical and trade dynamics.
On the domestic front, large-scale investments in ports, free zones, and logistics parks continue to expand capacity and efficiency. Dubai’s Jebel Ali Port, among the world’s busiest, is increasing throughput while deepening integration with the Jebel Ali Free Zone (JAFZA), enabling more streamlined supply chains for manufacturers and traders.
In Abu Dhabi, Khalifa Port and KIZAD are attracting new industrial activity and form part of China’s Belt and Road network. Meanwhile, the Etihad Rail project is set to connect major ports with industrial centres via freight rail, lowering transport costs and transit times.
Externally, global supply chain diversification is reinforcing the UAE’s role as a regional distribution and light-assembly hub for the Middle East and Africa. Leading players such as DP World and AD Ports Group are expanding internationally to secure critical trade corridors, with assets spanning Africa, the Middle East, and Central Asia that increasingly channel volumes through the UAE. Air cargo remains a key advantage, with Dubai International Airport and Al Maktoum International ranking among the world’s busiest cargo hubs, supported by Emirates SkyCargo’s global network.
E-commerce growth is further strengthening the sector, as major platforms including Amazon, Noon, and Alibaba expand regional fulfillment operations in the UAE. A key development to watch is progress on the India–Middle East–Europe Economic Corridor, which positions the UAE as a central node in a future multi-modal trade route linking Asia to Europe.
Also read: UAE E-Commerce Regulation and Licensing Requirements
Conclusion
The UAE enters 2026 with a rare combination of strong growth, fiscal resilience, and structural reform momentum. While headline growth is expected to moderate slightly from the highs of 2025, it remains well above global averages and underpinned by both oil and non-oil drivers.
For investors and businesses operating in the Middle East, the UAE continues to offer a stable macroeconomic environment, deepening market opportunities, and a clear long-term development trajectory.
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