Based on regulator data and macroeconomic indicators, 2026 is shaping up not as a cycle reversal, but as a continuation of the current growth phase — with more structure and lower volatility.

The overall backdrop remains predictable, supported by diversified growth drivers, low inflation, and a well-capitalised banking system.

The UAE macro environment entering 2026 is characterised by continuity, not regime change.

Economic Growth

GDP growth in 2026 is expected to be around 5.3%.

The key contributors are non-oil sectors, including:

  • Services
  • Construction
  • Financial activities
  • Related professional industries

Non-oil sectors now account for over 75% of the UAE’s economic structure, underlining the diversified and sustainable nature of growth.

This composition materially reduces sensitivity to commodity price cycles.

Inflation: Actual Data vs Forecast

It is important to distinguish observed inflation from forward-looking projections.

  • 0.6% — actual inflation in Q2 2025 (year-on-year), reflecting current price stability
  • 1.8% — projected average inflation for 2026

A notable exception is the housing and utilities category:

  • Approximately 4.1% year-on-year growth observed in 2025 (actual data, not a forecast)

This category represents roughly 35% of the consumer basket, meaning it accounts for most of the inflationary pressure despite low headline inflation.

Liquidity and the Banking System

Liquidity conditions remain supportive.

Key indicators continue to show expansion:

  • Cash and current account balances: ~+16% year-on-year
  • Bank deposits: ~+13% year-on-year
  • Credit growth: ~+11% year-on-year
  • Non-performing loans: ~1.7%

The banking system remains well capitalised, with high liquidity buffers and no visible deterioration in asset quality.

From a macro perspective, access to financing remains intact for both businesses and households.

Macro Implications for Asset Markets

📌 The UAE enters 2026 in a position of stable economic growth, low overall inflation, and strong liquidity.

Price pressure is localised, concentrated in specific components rather than across the economy as a whole.

For asset markets, this creates a calm and predictable environment:

  • No signs of overheating
  • No signals of abrupt slowdown
  • Continued access to credit and investment capital

Pro Tip

Stable macro conditions tend to favour disciplined capital allocation over speculative positioning.

This is not a transition year — it is a continuation year, with clearer structure and reduced macro volatility.