Dubai economy seen growing 4.5% in 2026, driven by tourism, population and spending

Dubai: Dubai’s economy is forecast to expand by 4.5% in 2026, maintaining the same pace as 2025 and outperforming global growth trends, Emirates NBD said in its latest economic outlook. The expansion will be supported by ongoing strength across both the private and public sectors, continued recovery in tourism, infrastructure investment, and a steady increase in population and visitor numbers.

The projection underlines Dubai’s strong economic fundamentals, with the bank estimating global GDP to average 3.1% next year, while advanced economies are expected to grow by 1.6% and emerging markets by 4.0%.

According to Emirates NBD, Dubai’s economy expanded by an estimated 4.4% in the first half of 2025, up from 3.3% in 2023 and 3.2% in 2024. Purchasing Managers’ Index data for October and November rose to 54.5, its strongest reading since January, indicating robust momentum across key sectors.

The report highlighted that a softer monetary policy expected from the US Federal Reserve and reduced global trade uncertainty will provide additional support to the UAE economy next year. Lower interest rates and improved financing conditions are also expected to boost investment activity, while easing geopolitical tensions in the region should reinforce investor and consumer confidence.

Tourism remains one of the main pillars of Dubai’s growth story. Visitor numbers rose around 5% in 2025, reaching 15.7 million between January and October, and the report sees further upside in 2026. The sector is expected to benefit from a more stable regional environment, improved air connectivity, and a growing array of cultural, medical, and business events.

The hospitality industry continues to expand, driven by new hotel and restaurant launches. The recently introduced Dubai Hotel Incentive Scheme, which will reimburse municipality fees on rooms for the first two years of operation, is expected to support additional investment in the sector.

Market analysts also point to the introduction of contactless biometric check-in at Dubai hotels and the expansion of major conferences and expos as part of a broader strategy to solidify Dubai’s position as one of the world’s leading tourist destinations.

Medical tourism has emerged as a further growth driver, supported by an agreement between the Dubai Health Authority and the Department of Economy and Tourism to promote health-related travel. This segment contributed to a 20% year-on-year increase in GDP for human health and social work activities during the first half of 2025.

Dubai’s rapid population growth continues to be a major factor behind its economic expansion. The emirate’s population crossed the 4 million mark in 2025, representing a 5.4% year-on-year increase, with official projections aiming for 5.8 million by 2040.

This demographic expansion is driving sustained demand for real estate, construction, education, healthcare, and utilities. While housing prices have risen since the pandemic, inflation remains contained. Emirates NBD forecasts headline consumer price inflation at 2.5% in 2026, slightly below 2025’s average of 2.8%.

Government investment remains centred on long-term infrastructure and livability priorities, aligning with the Dubai Economic Agenda. The Roads and Transport Authority has allocated Dh20.5 billion to the new Dubai Metro Blue Line, scheduled to begin operations in 2030, and has also committed to complete 11 new road corridors by 2027.

In addition, Dubai’s Executive Council recently approved a Dh18 billion strategy to expand parks and green spaces, part of broader efforts to enhance urban livability and environmental quality.

Emirates NBD expects Dubai’s economic trajectory to remain firmly positive in 2026, supported by fiscal discipline, sustained private sector dynamism, and an expanding services economy. The combination of population growth, infrastructure investment, and a strong tourism sector positions the emirate to continue outperforming regional peers and global averages.