UAE economy grows 6.2% in 2025 as Central Bank warns of temporary 2026 slowdown
UAE economy expanded 6.2% in 2025, driven by non-oil sectors, while the Central Bank forecasts a temporary slowdown to 1.7% in 2026 before a sharp rebound to 9.8% in 2027.
The UAE economy recorded robust growth of 6.2% in 2025, the Central Bank said in its Quarterly Economic Review for June 2026, underscoring continued momentum outside the oil sector. Non-oil activity led the expansion with a 6.8% increase, while the oil sector rose by 4.3%, reflecting a diversified growth profile across the federation. The report attributes the performance to sustained investment in infrastructure, rising private-sector activity and stronger global demand for key exports.
Central Bank reports strong 2025 GDP performance
The Central Bank’s June 2026 review shows non-oil industries such as construction, financial services, wholesale and retail trade, real estate and transport were the principal drivers of growth. These sectors benefitted from ongoing economic diversification policies and large-scale public and private projects that supported employment and domestic demand. The bank emphasised that the underlying fiscal and financial fundamentals remain solid, supported by government measures to bolster business resilience and investor confidence.
Labour market expands with employment growth and modest wage pressures
Employment covered by the Wage Protection System rose by 11.7% year‑on‑year through March 2026, signalling strong labour demand across the economy. Average wages climbed by 0.7% over the same period, a modest increase that the Central Bank said reflects hiring in operational and lower‑paid roles rather than broad wage inflation. The combination of rapid job creation and limited wage growth suggests labour costs are not translating into significant inflationary pressures at present.
Non-oil trade reaches record volumes in 2025
Non-oil trade volumes surged to AED 3.568 trillion in 2025, an increase of 27.4% from the previous year, the Central Bank reported. Non-oil exports jumped 47.8% to AED 801.1 billion, with notable gains in exports of gold and jewellery as well as aluminium. The trade performance underscores the UAE’s expanding role as a regional trading hub and highlights the contribution of value‑added and commodity exports to the broader economy.
Real estate transactions accelerate in Abu Dhabi and Dubai
Residential sector activity in Abu Dhabi saw transactions rise by 119.6% year‑on‑year in the first quarter of 2026, driven by demand for new developments and renewed investor interest. Dubai also posted significant gains, with total real estate transaction value up 30.3% over the same period, reflecting strong market liquidity and buyer appetite. The Central Bank noted that robust property market activity is linked to broader economic growth and targeted policy measures that support investment in housing and commercial projects.
Banking sector maintains resilience with rising assets and improved asset quality
The banking system remained resilient at the end of the first quarter of 2026, with total bank assets increasing to AED 5.56 trillion. Loan books expanded 20.3% and deposits rose 17.4%, while the net non‑performing loans ratio fell to 1.5%, indicating improved asset quality and credit conditions. The Central Bank maintained its policy alignment with the US monetary stance, keeping the policy rate at 3.65%, a move it said supports financial stability while allowing banks to continue financing economic activity.
Insurance industry posts higher premiums and claims in Q1 2026
The insurance sector continued to strengthen, with total written premiums up 15.1% year‑on‑year to AED 27.5 billion in the first quarter of 2026. Total claims paid rose 14.5% to AED 12.6 billion, while technical provisions and solvency metrics showed improvement across major firms. Regulators and market participants highlighted that growth in premiums and payouts reflects both higher economic activity and structural improvements in underwriting and risk management.
Central Bank flags temporary 2026 slowdown, forecasts sharp rebound in 2027
Despite the strong 2025 outturn, the Central Bank expects real GDP growth to moderate to 1.7% in 2026, attributing the slowdown to regional tensions that could affect trade, shipping, tourism and private‑sector confidence. The bank described the 2026 dip as temporary and projected a rebound to 9.8% in 2027, supported by higher oil production, continued non‑oil expansion, elevated government spending and large infrastructure projects. Inflation is expected to remain moderate, with the Central Bank forecasting an average rate of 2.3% in 2026 and 1.9% in 2027.
Looking ahead, policymakers will rely on fiscal buffers, targeted support measures and a resilient financial system to manage near‑term risks and sustain recovery momentum. The Central Bank emphasised that continued diversification, investment in strategic sectors and prudent macroeconomic management will be key to delivering the stronger growth projected for 2027 and beyond.