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The UAE’s non-oil GDP is forecast to be the fastest growing in the GCC region through 2026, National Bank of Kuwait (NBK) said in a research note seen by EnterpriseAM. The bank expects the non-oil economy to maintain robust growth of 4.5% next year — a slight decline from this year’s 4.8%.
Driving the growth: The expansion will be supported by strong consumption and credit growth rates, accelerated population growth, higher demand in the real estate sector, as well as larger investments in key sectors including energy, transport, and AI, according to the note.
How this compares: Moody’s expects the non-oil sector to grow 4-5% between 2025 and 2026, supported by projects such as the Etihad Rail network and the unified Gulf visa launching next year, which should bolster tourism and investment flows. Fitch Solutions’ research unit BMI, on the other hand, sees the non-oil sector expanding 5.8% y-o-y, boosted by easing geopolitical tensions.
NBK sees inflation softening to below 2% in 2026, driven by slower growth for rental prices in Dubai, weaker food inflation and fuel prices. This is broadly in line with the CBUAE inflation forecast of 1.8% in 2026, while the World Bank and the IMF see inflation growing at 2% for the year ahead.
The property market is expected to continue booming, but at a slower pace: While market sales surged in Dubai (+20% y-o-y) and Abu Dhabi (+40% y-o-y) in 3Q 2025, the trend is expected to slow down in 2026 — especially for Dubai, due to government initiatives to increase housing supply, the note explains.
NBK sees the fiscal surplus shrinking to 4.2% of GDP in 2025, and to 3.7% in 2026, on the back of higher government spending. This is slightly narrower than the World Bank’s forecast of a 4.4% fiscal surplus in 2025, and a 4.9% surplus in 2026. Meanwhile, the current account is expected to hold steady at 13% of GDP in 2026 due to greater oil export volumes along with higher prices for precious metals, the note explains. This once again diverges from the World Bank’s forecast, which pegs the surplus at 7.1% this year, before rebounding to 7.7% in 2026.
Potential risks? The UAE could face some headwinds forthcoming from lower oil prices, an overheating economy caused by higher inflation levels due to higher growth rates, a slowdown in the property market, as well as a global slowdown or higher geopolitical tensions.
On a positive note: Despite economic turbulence in 2025, the UAE’s economy remained agile thanks to elevated diversification efforts, stable macroeconomic management, and a lessened tariff impact, NBK said. The bank expects these developments to be carried through 2026, with easing geopolitical tensions further supporting growth. Additionally, the UAE will benefit from increased oil production and capturing market shares upon the completion of the Upper Zakum/Dalma fields in 2026.
