19.05.2026
United Arab Emirates’ economy expanded strongly in 2025, supported by robust non-oil activity, higher hydrocarbon production and continued diversification. Growth is expected to slow in 2026 due to regional conflict-related disruptions to trade, logistics, tourism and investor sentiment, before strengthening again in 2027 as hydrocarbon output recovers and non-oil sectors continue to expand. Inflation remains low but is expected to rise moderately in 2026. Fiscal and external balances remain firmly in surplus, supported by hydrocarbon revenues, strong non-oil activity and large external buffers.
| Indicators | 2025 | 2026 | 2027 |
|---|---|---|---|
| GDP growth (%, yoy) | 5.6 | 2.4 | 4.1 |
| Inflation (%, yoy) | 1.3 | 2.5 | 2.1 |
| Employment rate (% of working-age population, 15+) | 80.1 | 79.8 | 80.0 |
| Fiscal balance (% of GDP) | 4.7 | 4.4 | 3.8 |
| Gross public debt (% of GDP) | 29.9 | 29.1 | 28.4 |
| Current account balance (% of GDP) | 13.8 | 13.6 | 10.2 |
Growth slows temporarily amid regional uncertainty
Real GDP growth is estimated at 5.6% in 2025, supported by strong non-hydrocarbon activity and higher oil production. Non-oil growth was driven by wholesale and retail trade, manufacturing, financial services, construction and tourism-related sectors, reflecting continued diversification and business reforms.
Growth is projected to slow to 2.4% in 2026 as regional conflict weighs on trade, logistics, aviation, tourism and investor sentiment. It is expected to recover to 4.1% in 2027, supported by stronger hydrocarbon output and continued expansion in non-oil sectors. The medium-term outlook remains favourable, but more exposed to geopolitical and transport-route risks than before.
Non-oil sectors remain resilient
The UAE’s non-oil economy remains the main anchor of resilience. Financial services, manufacturing, construction, real estate, wholesale and retail trade, tourism and logistics continue to benefit from population growth, foreign investment, digitalisation and reforms aimed at improving the business environment.
However, the UAE’s role as a regional hub also creates exposure to external shocks. Airspace disruptions, higher freight and insurance costs, weaker tourism flows or lower investor confidence could affect services activity. Continued investment in AI, logistics, renewable energy, financial services and high-value manufacturing should help support diversification.
Inflation remains low but rises moderately
Inflation remained contained at 1.3% in 2025, helped by easing food inflation and lower transport costs, although housing prices continued to rise. Inflation is projected to increase to 2.5% in 2026 before easing to 2.1% in 2027.
The exchange-rate peg to the US dollar helps anchor inflation expectations and keeps monetary policy aligned with US interest-rate conditions. Upside risks come mainly from higher import costs, shipping disruptions, housing rents, energy prices and renewed regional instability.
Fiscal and external buffers remain strong
The fiscal surplus is estimated at 4.7% of GDP in 2025 and is projected to remain sizeable, at 4.4% in 2026 and 3.8% in 2027. Public debt is expected to decline gradually from 29.9% of GDP in 2025 to 28.4% in 2027, supported by strong revenues and prudent fiscal management.
The current account surplus remains large, at 13.8% of GDP in 2025 and 13.6% in 2026, before narrowing to 10.2% in 2027. Hydrocarbon exports, services income, logistics, tourism, re-exports and investment income all support the external position. Large sovereign wealth assets and foreign-exchange buffers provide additional resilience.
Overall outlook
The UAE is expected to remain one of the stronger performers in the Gulf, supported by diversification, investment, population growth and large fiscal and external buffers. Growth is likely to slow temporarily in 2026 because of regional disruption risks, but should recover in 2027 if instability does not persist. The main medium-term challenge is to sustain non-oil growth while managing exposure to oil prices, regional security risks, logistics disruptions and global financial conditions.
Sources:
World Bank, United Arab Emirates Macro Poverty Outlook, April 2026.
Central Bank of the UAE, Quarterly Economic Review, March 2026.
International Monetary Fund, World Economic Outlook, April 2026.
International Monetary Fund, United Arab Emirates: 2025 Article IV Consultation and Staff Report.
UAE Ministry of Finance, Federal Government Public Debt Report 2022–2025.
