The UAE is officially decoupling from the traditional “wait and see” oil cycle. By running on an expansionary AED 92.4 bn federal budget while Opec+ pauses production hikes for 1Q 2026, the government is signaling that it will use its massive buffers (and new tax revenue) to “buy” the future.

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Why it matters: While regional peers may face deficits, the UAE is operating from a position of fiscal strength. The budget breakeven oil price sits at just USD 48.5 / bbl — far below the c.USD 60 / bbl oil is currently trading at, EFG Hermes said in an outlook note (pdf). With that, the government has room to spend while still achieving a fiscal surplus of 3.7-4.0% of GDP, according to forecasts from Emirates NBD (pdf) and NBK. The budget has penciled in record levels of spending for social development (accounting for 37% of the budget), with infrastructure remaining a priority spending area as well.

Manageable debt: The debt-to-GDP ratio is projected to come in around 30% in 2026, CI Capital said in a note seen by EnterpriseAM. The manageable debt levels give the government ample room to use fiscal buffers and sovereign reserves to insulate the economy from global energy price volatility and trade tensions.

Steady growth and soft inflation

The consensus among local and international analysts is that GDP will remain on a steady acceleration trajectory in 2026. Emirates NBD sees growth coming in at 5.0%, while NBK expects 5.1% growth this year. Both the IMF (5.0%) and World Bank (4.8%) forecast growth in 2026 to be driven by broad-based momentum in non-oil activities and a gradual improvement in oil output. That’s more or less in line with the Central Bank of the UAE (CBUAE), which has penciled in 5.2% growth, putting the UAE on track to be one of the fastest-growing diversified economies in the Gulf.

The non-oil engine: Now accounting for over 75% of total GDP, the non-oil economy is expected to grow at a 5.2% clip in 2026, according to World Bank projections. This growth is being driven by heavy investments in AI and data centers, as well as a trade network where Cepa partners now account for 37.4% of exports and 39.2% of imports, Emirates NBD notes.

Meanwhile, the oil economy is still on track for strong growth this year, with Emirates NBD seeing oil GDP rising 4.0% in 2026, while the CBUAE projects a higher growth rate of 6.7%, even as Opec maintains plans to pause supply increases in 1Q 2026. UAE oil production is set to average 3.7 mn bbl / d in 2026.

Businesses can bank on a predictable environment with soft and stable inflation in the cards. The CBUAE maintains its 2026 inflation projection at 1.8%, while Emirates NBD (1.5%) and NBK (1.3%) are even more bullish on price stability. This inflation outlook is underpinned by easing global food prices, lower energy costs, and a moderation in rental price growth.

The GCC at large

While the region as a whole is set to register 4.4% growth (up from 4.0% last year), the UAE and Qatar are emerging as the fiscal outliers, Oxford Economics has said. With Brent projected to average at USD 60 / bbl, national budgets will be under strain for some countries, such as Saudi Arabia, which is expected to face a deficit of approximately 5.0% of GDP.

The hydrocarbon hedge: Regional oil GDP is expected to hit 6.5% growth — the fastest pace since 2022 — buoyed by Qatar’s North Field expansion and a shift by Opec toward prioritizing market share, according to a separate research note from Emirates NBD.

Non-oil base effects: Aggregate non-oil growth across the GCC is actually expected to slow slightly to 4.4% (from 4.8% in 2025) as the “post-Covid” momentum finally normalizes.

GCC inflation is anticipated to soften to 1.8% from an estimated 1.9% in 2025, driven by cooling housing costs, lower global oil prices, and a weakening USD, Emirates NBD says.

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