Powered by surging non-oil activity in the UAE and Saudi Arabia, the GCC’s gross domestic product is projected to expand by 4.4 per cent in 2026, according to ICAEW’s Q4 2025 Economic Insight. Drawing on analysis from Oxford Economics, the report underscores the UAE’s accelerating transformation into a regional economic engine, driven by private-sector dynamism, strategic fiscal stimulus, and long-term diversification.
ICAEW forecasts the UAE’s GDP to rise 5.6 per cent in 2026, cementing its position as one of the Gulf’s fastest-growing economies. Tourism, trade, logistics, real estate, and financial services are expected to remain the primary drivers of this expansion, supported by strong population growth, a buoyant labour market, and sustained domestic demand. Major government investment programmes aligned with the “We the UAE 2031” strategy further anchor long-term momentum.
Dubai has already demonstrated the resilience of the UAE’s non-oil economy. The emirate posted growth of 4.4 per cent in the first half of 2025, propelled by trade, transport, hospitality, and financial services. Meanwhile, the federal government’s 2026 budget plans reflect a significant uplift in spending on infrastructure, technology, digital transformation, and cross-border economic corridors, reinforcing the country’s forward-looking development agenda.
Abu Dhabi’s trade performance also underscores the UAE’s expanding global footprint. Non-oil foreign trade surged by 34.7 per cent in the first half of 2025 to AED 195.4 billion, reflecting the emirate’s rapid rise as a global trade and logistics hub and the success of nationwide efforts to diversify export capacity beyond hydrocarbons.
Complementing the ICAEW outlook, the Central Bank of the UAE (CBUAE) offers a similarly strong growth picture. Its June 2025 Quarterly Economic Review projects real GDP growth of 4.4 per cent in 2025 and 5.4 per cent in 2026, fuelled by a rebound in hydrocarbon production and healthy non-oil activity. A later revision in September 2025 lifts the 2025 forecast to 4.9 per cent, with 2026 estimated at 5.3 per cent — reflecting faster-than-expected oil-sector adjustments under updated Opec+ policy. The central bank expects non-hydrocarbon GDP to grow 4.5 per cent in 2025 and 4.8 per cent in 2026, while hydrocarbon output is forecast to rise 5.8 per cent and 6.5 per cent respectively. Inflation is projected to remain contained at around 1.5–1.9 per cent.
Across the wider GCC, ICAEW expects non-energy activity to expand by 4.1 per cent in 2026, supported by strong labour markets, improved credit conditions, and accelerating investment — particularly in technology and artificial intelligence infrastructure. Consumer spending is forecast to grow by an average of 3.5 per cent in 2026–2027, reinforcing steady domestic demand across the region.
Saudi Arabia will remain a major contributor to this regional momentum, with GDP growth projected at 4.3 per cent in 2026. Non-oil sectors are strengthening, reflected in a purchasing managers’ index above 60 and robust year-to-date growth in non-oil exports. Policy reforms, including relaxed foreign-ownership rules, are expected to draw additional investment. However, fiscal challenges persist, with the fiscal deficit anticipated to widen to 5.6 per cent of GDP. Despite these pressures, Riyadh continues to prioritise development spending under Vision 2030, supporting long-term diversification.
“This quarter’s outlook reinforces how far the GCC has come in building diverse, resilient, and globally competitive economies,” said Hanadi Khalife, ICAEW’s head of Middle East. “With the UAE and Saudi Arabia driving momentum through non-oil expansion, investment in technology, and long-term planning, the region is confidently navigating global uncertainties.”
Scott Livermore, ICAEW economic adviser and chief economist at Oxford Economics Middle East, added: “Saudi Arabia and the UAE are entering 2026 with strong foundations. While oil-sector growth may soften early in the year due to OPEC+ production policies, easing financial conditions and rising non-oil activity should fuel another strong year.”
Analysts say the UAE’s strategic location, sweeping economic reforms, and future-focused policymaking are not only accelerating its own growth trajectory but also lifting the wider GCC. With rising non-oil export capacity, booming trade flows, and innovation-led investment, the UAE is emerging as a cornerstone of the Gulf’s shift towards sustainable, diversified economic expansion.
