5.2% expected growth in GDP in 2026

The Central Bank expects that the economic growth of the UAE’s gross domestic product will accelerate next year, reaching 5.2%, compared to 5% growth expected for the current year 2025, according to the quarterly economic report, December 2025, which the Central Bank published yesterday.

The Central Bank lowered its inflation rate expectations to 1.3% for the current year, down from the 1.5% it had previously expected, as a result of continuing low trends in transportation costs and commodity prices, other than energy.

The Central Bank said in its report: “The UAE’s economy showed strong resilience in light of the global uncertainty, as the gross domestic product recorded a growth of 4.5% on an annual basis in the second quarter of 2025, driven by the strong performance of non-oil activities, especially in the financial services, insurance, manufacturing, and construction sectors.”

He added: “The economic outlook for the UAE remains positive, supported by the rise in oil production and the continued strong momentum in non-oil activities. GDP growth is expected to reach 5.0% in 2025, with the non-hydrocarbon sector expanding by 4.9%, and the hydrocarbon sector returning to growth by 5.4%, driven by the faster-than-expected lifting of production cuts after increases in OPEC+ production quotas. In 2026, growth is expected to accelerate to 5.2% supported by improved performance of both sectors.”

The Central Bank continued: “The inflation rate in the UAE reached 1.1% in the third quarter of 2025, in light of the continued decline in energy costs and the decline in food prices. Accordingly, the Central Bank of the UAE has revised its inflation expectations for the year 2025 by reducing it to 1.3% compared to 1.5% previously, as a result of the continuing low trends in transportation costs and prices of non-energy goods.”

The Central Bank said: “The banking sector in the UAE continued to achieve strong performance, as total assets increased by 18.1% on an annual basis to reach 5.2 trillion dirhams by the end of the third quarter of 2025. The loan portfolio also increased by 14.7% and deposits by 15.4%. Banks maintained strong levels of capital, with the capital adequacy ratio reaching 17.4%, in addition to improving asset quality with the non-performing loan ratio decreasing to 1.6%.”

The Central Bank indicated that the insurance sector achieved remarkable growth, as written premiums and the number of insurance policies increased by 13.7% and 6.9%, respectively, in the third quarter of 2025. Technical allocations and property rights increased by 2.2% and 7.8%, respectively.

In turn, the residential real estate market in the country witnessed increasing momentum during the first nine months of 2025, with double-digit growth rates recorded in the number of sales transactions, driven mainly by strong demand for residential apartments.

As for capital markets, they recorded a strong performance in the third quarter of 2025, as the Dubai Financial Market index rose by 37.9% on an annual basis, while the Abu Dhabi Securities Market index rose by 8.7%.