Regional Slowdown, But UAE Stands Out
The ongoing regional conflict is expected to slow economic growth across the Middle East. According to the World Bank, growth in the Middle East and North Africa (MENA) region is projected to decline from around 4.0% in 2025 to 1.8% in 2026, while GCC growth may fall from about 4.4% to 1.3%.
Despite this, the UAE is expected to perform relatively better, with projected growth of ~2.4% in 2026, higher than the GCC average. The World Bank also notes that the UAE has the fiscal strength to absorb short-term spending pressures and can recover relatively quickly if the conflict is short-lived.
Structural Resilience of the UAE Economy
Despite short-term pressures, the UAE economy remains relatively resilient. Non-oil sectors contribute ~75% of GDP, reflecting diversification into trade, logistics, tourism, and financial services. Additionally, strong fiscal buffers, low public debt, and significant sovereign wealth reserves enable the government to respond to external shocks. Moreover, the country’s non-oil foreign trade crossing ~AED 3.8 trillion (USD 1 trillion) in 2025 further highlights its position as a global trade and investment hub.Proactive Government Measures
In response to the economic impact of the conflict, the UAE, particularly Dubai, has implemented targeted support measures. Dubai has introduced an AED 1 billion stimulus package, which is a proactive and calibrated policy response. Unlike traditional crisis packages, this initiative is designed as a stabilization tool to maintain economic momentum rather than revive a weakened economy.The measures focus on easing liquidity pressures through fee deferrals, reducing operational costs for businesses, and supporting key sectors such as tourism and hospitality, which contribute ~12% to Dubai’s GDP. Additional steps, including flexible payment options and fee waivers for businesses, further help sustain cash flow and ensure continuity.
At a broader level, the UAE government continues to rely on its policy flexibility, fiscal strength, and diversified economic base to mitigate the impact of external shocks and sustain investor confidence.
Overall Outlook
The UAE’s economic outlook remains relatively stable compared to regional peers. The combination of fiscal capacity and targeted policy measures is expected to limit the impact of the conflict.
However, the extent of the impact will depend on how long the conflict continues, particularly through its effects on trade, tourism, and broader regional economic activity.
