UAE economy to slow to 1.7% in 2026 before rebounding to 9.8%

Abu Dhabi: The Central Bank of the UAE expects economic growth to moderate to 1.7 per cent in 2026 as regional developments weigh on trade, shipping, tourism and private sector confidence, while forecasting a strong rebound to 9.8 per cent in 2027.

In its June 2026 Quarterly Economic Report, the central bank said the slowdown is expected to be temporary, with stronger growth next year driven by higher oil production, continued expansion in non-oil sectors, robust government spending and ongoing infrastructure projects.

The report said the UAE economy remains supported by strong fiscal and financial fundamentals, underpinned by government measures to strengthen the resilience of the financial sector, support businesses and sustain public investment. 

These policies are expected to cushion the impact of external challenges while maintaining investor confidence and market stability.

The central bank also highlighted the continued strength of the banking sector, with total banking assets reaching Dh5.56 trillion, supported by robust growth in assets, credit and deposits, strong capital adequacy and improving asset quality.

Inflation is expected to remain contained, averaging 2.3 per cent in 2026 before easing to 1.9 per cent in 2027, remaining well below the global average, according to the report.

The central bank said the UAE's economic outlook continues to benefit from diversified growth drivers, proactive policy measures and substantial fiscal buffers, alongside gains in the capital markets, a resilient banking sector and continued expansion in the insurance industry.

It added that the country's diversification strategy, combined with continued support for businesses, investors and consumers, is expected to reinforce the economy's resilience and adaptability despite a challenging external environment.