The UAE economy continues to demonstrate resilience despite ongoing geopolitical uncertainty, with the International Monetary Fund highlighting the country’s strong financial position, proactive policy response, and diversified economy as key reasons it has weathered recent regional disruptions. While economic growth is expected to soften slightly in 2026 due to temporary pressures on trade, tourism, transportation, and real estate, the IMF forecasts a recovery during the second half of the year and a stronger rebound in 2027 as oil production increases and non-oil sectors regain momentum.
Original article: UAE economic growth outlook remains resilient despite Hormuz disruptions, says IMF by Economy Middle East.
Key Insights:
Strong Financial Buffers Continue to Support Market Confidence
The IMF highlighted the UAE’s strong public finances and substantial financial reserves as key reasons the economy has remained resilient during recent regional disruptions. Despite intermittent closures of the Strait of Hormuz and softer activity across tourism, trade and transportation, the country is expected to maintain a fiscal surplus in 2026, supported by favourable oil revenues, conservative budgeting and efficient public spending. This provides the government with the flexibility to support businesses, households and planned public investment while maintaining long-term fiscal stability.
Diversification Is Strengthening Long-Term Economic Resilience
One of the clearest messages from the IMF is that the UAE’s long-term growth story extends well beyond hydrocarbons. Continued expansion of Comprehensive Economic Partnership Agreements (CEPAs), investment in supply chain resilience, technology and human capital, alongside the country’s growing non-oil economy, provides multiple drivers of future growth. While short-term uncertainty has affected some sectors, these structural initiatives continue to broaden economic activity and reduce reliance on any single source of growth.
A Temporary Market Moderation Reflects a More Mature Economy
The moderation seen across parts of the real estate market during the first half of 2026 follows several years of exceptionally strong growth rather than indicating a weakening market. Importantly, the IMF noted that property prices generally remained at or above 2025 levels, while banks’ exposure to real estate remains contained and capital buffers continue to exceed regulatory requirements. Combined with expectations for stronger hydrocarbon production, recovering exports and improving tourism flows into 2027, the current environment reflects a measured adjustment rather than a fundamental shift in market conditions.
Resilience Continues to Define the UAE Economy
The IMF’s latest assessment highlights the strength of the UAE’s broader economic framework rather than simply its short-term performance. Strong public finances, well-capitalised banks and a diversified economy have helped limit the impact of recent geopolitical disruption while preserving financial stability.
Although growth is expected to moderate slightly in 2026, the slowdown follows several years of exceptionally strong economic expansion and is expected to prove temporary. The IMF forecasts improving conditions during the second half of the year, with a stronger recovery anticipated in 2027 as trade normalises, non-oil sectors regain momentum and oil production increases.
For investors, the report reinforces the UAE’s ability to navigate periods of uncertainty without undermining its longer-term outlook. Continued investment in trade, infrastructure and economic diversification provides a strong foundation for future growth as regional conditions stabilise.
