UAE growth outlook strengthened to 5%

Economic momentum across the UAE is building faster than earlier projections, with gross domestic product expected to expand by about 5% this year, outpacing the global average and reinforcing the country’s position as one of the strongest performers among emerging and developed markets alike. The revised outlook reflects resilient trade flows, deep banking liquidity and sustained expansion across non-oil sectors that have insulated growth from global volatility.

Standard Chartered has lifted its forecast for the UAE’s GDP growth in 2026 to 5%, up from an earlier estimate of 4%, citing firm indicators already visible in trade volumes, credit conditions and private-sector activity. The reassessment signals confidence that growth drivers have broadened beyond hydrocarbons and are now embedded across logistics, tourism, manufacturing, financial services and technology-led industries.

Stronger outlook lifts UAE growth expectations, underscoring the view that the economy is entering a phase of sustained expansion rather than a cyclical rebound. Rola Abu Manneh, chief executive for UAE, Middle East and Pakistan at Standard Chartered, said the country continues to stand out globally, with growth expected to remain close to potential for a second consecutive year. Her remarks highlight confidence that policy reforms and investment flows are translating into durable economic gains.

Trade remains a central pillar of the upgraded forecast. The UAE’s role as a regional and global trading hub has been reinforced by higher re-export volumes, expanding logistics capacity and stronger links with fast-growing Asian and African markets. Major port operators and free zones have reported solid throughput growth, reflecting both domestic demand and the country’s function as a gateway for cross-border commerce.

The banking sector is another key contributor. Elevated liquidity levels, supported by strong deposit growth and prudent regulation, have enabled lenders to expand credit to businesses and households without compromising balance-sheet strength. Credit growth has been particularly visible in sectors aligned with diversification goals, including manufacturing, clean energy, real estate and small and medium-sized enterprises, helping to spread economic activity more evenly across the economy.

Non-oil sectors continue to carry the bulk of growth. Tourism has remained robust, supported by steady visitor inflows, high hotel occupancy rates and increased spending across retail, hospitality and entertainment. The events and exhibitions calendar has also added momentum, drawing international business traffic and reinforcing the UAE’s status as a convening centre for trade, finance and technology.

Manufacturing and industrial activity have benefited from targeted incentives, infrastructure investment and access to competitive financing. Advanced manufacturing, food processing and metals have seen capacity expansions, while investments linked to energy transition technologies have opened new growth avenues. These developments are gradually lifting the contribution of industry to GDP and employment.

Public investment and fiscal policy continue to play a stabilising role. Government spending on infrastructure, digitalisation and human capital has supported private-sector confidence, while a stable tax environment and clear regulatory frameworks have encouraged long-term investment decisions. The introduction and refinement of corporate tax rules have proceeded without disrupting business sentiment, aided by exemptions and incentives aimed at maintaining competitiveness.

External conditions remain a variable, with global growth uneven and geopolitical risks persistent. However, economists note that the UAE’s diversified economic base and ample fiscal buffers provide resilience against external shocks. Foreign exchange reserves, sovereign wealth assets and strong sovereign credit ratings underpin investor confidence and help anchor macroeconomic stability.

Labour market dynamics also support the growth narrative. Population growth, driven by skilled expatriate inflows, has expanded the consumer base and labour pool, supporting sectors ranging from construction to professional services. Wage growth has remained contained, helping businesses manage costs while maintaining competitiveness.

Looking ahead, analysts point to continued reforms as a catalyst for sustaining momentum. Initiatives aimed at deepening capital markets, expanding digital government services and fostering innovation are expected to enhance productivity and attract further foreign direct investment. The financial sector’s growing role as a regional hub for wealth management and capital raising is also seen as a medium-term growth driver.