The UAE’s economy is anticipated to experience a recovery in the latter half of 2026, as exports gain traction and hydrocarbon production ramps up, according to a recent report from the International Monetary Fund (IMF). This positive outlook stems from resilient economic policies and adapted trade channels that have helped mitigate disruptions.

Hydrocarbon Sector Fuels Economic Rebound

The revival of hydrocarbon activities is expected to play a significant role in the UAE’s economic recovery. Following the country’s exit from OPEC and OPEC+ on May 1, 2026, authorities are set to boost oil output gradually, aligning production with global market demands. This strategic move aims to enhance energy supply flexibility while maintaining commitments to provide reliable, affordable, and low-carbon energy solutions.

The IMF notes that an uptick in oil production and export levels will likely counterbalance the recent disruptions caused by escalating regional tensions. The projected increase in hydrocarbon output is seen as a foundation for a more robust economic performance as the year concludes, setting the stage for further growth in 2027.

Trade Sectors Adjust to New Demand Dynamics

In the first half of 2026, sectors such as tourism, transport, trade, and real estate faced reduced activity levels due to broader geopolitical issues affecting demand and visitor inflow. The IMF forecasts indicate that during this year, non-oil activities will lag behind 2025’s performance. However, it is expected that normalization in tourism and trade will reignite momentum in 2027, particularly supported by increased hydrocarbon production.

The UAE’s various Comprehensive Economic Partnership Agreements will enhance market access for local exporters, enabling them to diversify their supply chains. An initiative designed to strengthen supply chain resilience further supports this effort. The IMF highlights the importance of technology investment and human capital enhancement as essential elements for sustained non-hydrocarbon growth in the country, which remains focused on economic diversification and external trade integration.

Fiscal and Banking Resilience Sustains Economic Stability

UAE government finances are projected to maintain a surplus throughout 2026. This is attributed to favorable oil revenues, prudent budgeting practices, and controlled expenditures, which will cushion the economy from the impacts of weaker non-oil activity. The planned infrastructure investments and targeted support measures further bolster the overall financial health of the nation.

Additionally, the country’s external accounts are expected to retain surplus conditions while gradually strengthening over the medium term. The anticipated increase in oil export volumes should help compensate for softer non-hydrocarbon trade. A robust level of international reserves will continue to provide a solid cushion for imports, while public and private sector balance sheets remain strong, limiting financing pressure.

Real Estate Outlook and Growth Projections for 2027

Real estate activities in the UAE showed signs of moderation in the first half of 2026 following several years of expansive growth. While prices have remained stable, the overall market is adapting to new conditions. Even so, performance varies across different segments and locations, though banking exposure to the property sector remains monitored and contained.

Looking ahead, IMF forecasts suggest that the UAE’s economy will see firmer output in 2027, driven by increased oil production and a recovery in non-oil activities. Although inflation is expected to rise in 2026 due to surging global energy and food prices, it is projected to stabilize over the medium term. With substantial fiscal, banking, and reserve buffers at their disposal, UAE policymakers are well-equipped to manage any volatility in economic conditions, ensuring the continued stability and growth of the economy.