The UAE is expected to remain one of the Middle East’s strongest economies in 2026, even with lower oil prices and regional uncertainties. Non-oil sectors, like private businesses in Dubai, infrastructure projects in Abu Dhabi, and tourism in the northern emirates, are driving most of this growth.
A recent S&P Global report shows the UAE’s economy (real GDP) could grow by 4.7% this year, with nearly three-quarters of that growth coming from non-oil activities. The country’s finances are also stable, with the government expected to keep a surplus equal to 2.3% of GDP, along with a strong current account surplus. This stability helps explain why the UAE maintains a high AA/Stable sovereign credit rating.
Middle East: Steady Growth and Resilience
Across the region, growth is expected to stay moderate at about 3.5% in 2026. This is supported by higher oil production, stronger non-oil sectors in the UAE and Saudi Arabia, and new LNG projects in Qatar. Many countries have improved their finances with measures like VAT, corporate taxes, and better budgeting, which reduces dependence on oil prices.
Some countries remain more sensitive to oil fluctuations. Bahrain and Oman face challenges if oil prices stay low, though Oman’s reforms have improved its position. Kuwait, on the other hand, has a large sovereign asset pool—over 500% of GDP—which makes it very resilient even with a projected fiscal deficit.
Geopolitics and Risks
While regional tensions continue, Gulf countries have historically managed to absorb shocks without major financial instability. 2026 projections assume no full-scale conflict, so credit systems are expected to remain stable. However, countries that rely heavily on external financing, like Bahrain, Saudi Arabia, and Qatar, could face pressure if uncertainty spikes. Strong regional support systems help reduce these risks.
Investment and Economic Diversification
Foreign investment into the Middle East remains limited and is expected to stay soft in 2026, partly because of geopolitical concerns. Countries like Saudi Arabia, which are pursuing large-scale diversification under Vision 2030, still rely heavily on public funding and external borrowing. Saudi Arabia’s fiscal deficit is expected to fall to 4% of GDP next year thanks to higher oil output and more non-oil revenue, but financing costs and bank liabilities remain a challenge.
Stronger Resilience Across the Region
Overall, Middle East economies are entering 2026 in a stronger position than in previous cycles. Bigger financial buffers, flexible fiscal policies, and ongoing reforms have improved resilience. For the UAE, broad-based growth and stable finances place it among the region’s most reliable economies, supported by its high sovereign credit rating and positive outlook.
Also Read: UAE Petrol, Diesel Prices for February 2026 Announced
Editor-at-Large
A passionate writer in the lubricant industry, Awais Iqbal has been covering oils, greases, and industrial fluids since the start of his career. At 25, he’s already written for blogs, catalogs, and brand guides across the UAE. Awais’s insights help companies connect with their audience, and his clear, helpful writing style is trusted by brands in the region.
