The IMF predicted a slight contraction in the UAE economy this year due to a slowdown in non-oil activities as a result of the war in the Middle East, with strong growth returning in 2027 supported by oil exports.
The IMF said in a statement following the conclusion of its annual mission to the UAE that higher oil prices during the conflict period would support the continued achievement of a budget surplus in the country.
The fund had predicted in April that the UAE’s GDP would grow by 3.1% during 2026, according to a scenario that assumes trade and shipping activity will return to normal levels by the middle of the year.
The statement explained that uncertainty about the duration and intensity of the conflict, in addition to the intermittent closures of the Strait of Hormuz, affected the tourism, trade, transport and real estate sectors, leading to a slowdown in the non-oil sector after its strong performance in 2025.
The IMF noted that the banking sector remained resilient thanks to high levels of capital and liquidity, with continued growth in credit and deposits, while real estate activity slowed during the first half of the year after years of strong expansion. Prices also remained at or above 2025 levels, prompting calls for continued monitoring of market developments.
Dubai announced that the emirate's economy grew by 2.4% year-on-year during the first quarter of 2026, compared to 4% growth during the same period in 2025. However, the statement issued this month announced an adjustment to the series of GDP data since the beginning of the year to reflect the results of the latest economic surveys.
