UAE recovery shows fortitude must be built in advance

The United Arab Emirates recorded a 3 percent annual growth in its economy during the first quarter of 2026, reaching a total value of Dh485 billion ($132 billion). This growth occurred despite the ongoing regional conflict involving Iran, which saw the UAE endure daily missile and drone attacks throughout the period. According to the UAE government media office, the non-oil sector contributed significantly to this expansion, growing by 4.8 percent and accounting for 79.4 percent of the national economy. The non-oil gross domestic product growth reflected the sustained vitality of key economic activities, with the government emphasizing the effectiveness of integrated policy measures aimed at reinforcing the UAE’s position as a global economic leader. The resilience of the national economy was highlighted, noting that the regional crisis affected only a limited range of activities and did not alter the overall direction of economic progress. Among the fastest-growing sectors were financial and insurance activities, which surged by 17.3 percent, followed by construction at 8.1 percent and human health and social work activities at 7.7 percent. Information and communication activities registered a 5.9 percent increase, while professional, scientific, and technical activities, along with administrative and support services, grew by 4.9 percent, underscoring continued momentum in high-value economic areas. Both financial centers of the UAE demonstrated robust performance. Abu Dhabi Global Market (ADGM) reported a 57 percent rise in assets under management within the three-month period, driven by steady capital inflows. Meanwhile, the Dubai International Financial Centre witnessed a record increase in the number of companies, attracting international banks, wealth managers, and hedge funds despite the backdrop of regional instability. Real estate activities saw a 4.8 percent growth, alongside increases in public administration, defense, and compulsory social security by 4.5 percent, and wholesale and retail trade by 2.6 percent. These figures illustrate the broad-based nature of the economic expansion, supported by the UAE's strategic focus on diversification and enhanced trade relations. As the Arab world's second-largest economy, the UAE continues to navigate the complexities of the current geopolitical landscape while maintaining its path toward economic diversification. The country has been actively pursuing Comprehensive Economic Partnership Agreements, aiming to bolster its economic resilience and expand market access for non-oil exports. Non-oil exports experienced a notable surge, rising by 23.9 percent during the first half of 2026 to reach Dh452.8 billion, marking the highest growth rate among the components of the UAE's foreign trade. Dr. Thani Al Zeyoudi, Minister of Foreign Trade, noted that the strong performance of foreign trade, supported by the country's competitive edge, has positioned the UAE as an attractive destination for high-quality investors. The government emphasized the pivotal role of trade openness in driving domestic production and enhancing the competitiveness of industrial and services sectors, which are central to the nation's economic strategy. The Iran war, which began on February 28 with Israeli and U.S. strikes on Iran, triggered a severe geopolitical crisis, leading to Iranian attacks on neighboring Arab states and the closure of the Strait of Hormuz. Despite these challenges, the UAE has maintained its economic momentum, demonstrating its capacity to withstand external pressures through strategic planning and diversified economic initiatives.