UAE Economic Expansion Set To Scale New Highs In 2026

(MENAFN- Khaleej Times)

The UAE economy is on track for another year of standout performance, with fresh forecasts pointing to strong and broad-based growth that underscores the country's rising stature as one of the world's most resilient and dynamic economic hubs.

According to Standard Chartered, the UAE's gross domestic product is expected to expand by 5.0 per cent in 2026, a sharp upgrade from its earlier 4.0 per cent projection and well above the anticipated pace of the global economy. This momentum builds on an already solid 2025, when nominal GDP is estimated to have reached around $569 billion, reflecting the success of diversification, trade expansion and sustained domestic demand.

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Standard Chartered's revised outlook highlights the UAE's ability to thrive amid global uncertainty. While softer oil prices may weigh on hydrocarbon revenues, the bank expects this to be more than offset by robust non-oil activity and the country's growing role in reconfigured global supply chains. As trade routes shift and companies seek reliable, well-connected markets, the UAE has emerged as a preferred gateway linking Asia, the Middle East, Europe and Africa. The bank forecasts the UAE's total foreign trade to approach the $1 trillion mark by 2026, with the Asia corridor alone accounting for roughly one-third of that volume.

This trade-driven expansion is being reinforced by a buoyant domestic economy. Non-oil sectors are expected to grow by about 4.5 per cent in 2026, supported by favourable demographics, rising population inflows and a thriving property market. Tourism, aviation, logistics, financial services and real estate continue to benefit from strong demand, while manufacturing and technology-related investments are adding depth to the growth story. Together, these sectors are reducing the economy's sensitivity to oil cycles and creating a more stable long-term trajectory.

Confidence in the UAE's outlook is widely shared among leading institutions. The Central Bank of the UAE has projected real GDP growth of around 5.3 per cent in 2026, building on strong momentum from 2025.

The International Monetary Fund expects the economy to expand by about 5 per cent, while the World Bank also sees growth of roughly 5 per cent extending into 2027. Regional and private-sector forecasters are similarly upbeat: Emirates NBD anticipates growth of around 4.5 per cent, citing Dubai's central role as a global trade and tourism hub, while the Institute of Chartered Accountants in England and Wales has projected growth as high as 5.6 per cent, driven largely by non-oil sectors.

Rola Abu Manneh, CEO of UAE, Middle East & Pakistan at Standard Chartered, said:“The UAE remains a bright spot on the global map, with the nation expected to remain on track to deliver growth at potential for two consecutive years in 2026. As we look toward the projected $1 trillion in foreign trade volumes, the UAE is rapidly cementing its status as a super-connector, navigating seamlessly through global trade fragmentations and thriving within them.”

One of the UAE's key strengths lies in its financial position. The country is expected to maintain twin fiscal and current account surpluses, supported by deep domestic liquidity and prudent policy management. Deposit growth continues to outpace private-sector credit expansion, which stood at just over 9 per cent year on year in mid-2025, giving the UAE the lowest loan-to-deposit ratio in the GCC. This provides banks with ample headroom to finance domestic growth while also pursuing cross-border lending opportunities, particularly in neighbouring markets.

Macroeconomic stability further enhances the outlook. Inflation is forecast to remain contained at around 1.8 per cent in 2026, reflecting effective price controls, diversified supply chains and stable housing costs. Low inflation gives policymakers room to maintain supportive monetary conditions, helping sustain investment and consumption without undermining financial stability.

Global conditions also appear broadly constructive for the UAE. Standard Chartered expects stronger growth in the United States in 2026, driven by business investment, corporate tax incentives and accelerating adoption of artificial intelligence, while China is projected to grow by around 4.6 per cent as export diversification offsets trade headwinds.

Although growth in parts of Europe and Asia may remain subdued, resilient global trade and technological gains are likely to support demand across key UAE-linked markets.

Crucially, the UAE's long-term strategy continues to pay dividends. Government-led investment in infrastructure, renewable energy, advanced manufacturing, artificial intelligence and digital services is crowding in private capital and positioning the country at the forefront of future growth industries. Policy reforms, including expanded residency programmes, foreign ownership rules and pro-business regulations, are reinforcing the UAE's appeal as a destination for talent and investment.

“From a projected GDP base of $569 billion in 2025, the UAE is poised to scale new heights, underpinned by diversification, global connectivity and policy stability. As multiple forecasts converge around growth of close to or above 5 per cent, the UAE is not only weathering global uncertainty but converting it into opportunity, reinforcing its status as one of the world's most promising growth stories,” economists said.

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