UAE Economy Contracts in Second Quarter

The UAE economy contracted 2.1% year-on-year in the second quarter, mainly due to reduced activity in tourism, transport, and trade amid regional tensions and disruptions.

Official data showed that the UAE economy grew at a meager 0.4 percent in the first half of 2026, reaching 961.9 billion dirhams (equivalent to $262 billion). During this period, non-oil activities grew by 1.8% and accounted for 79.2% of the total GDP.

According to Ambassador Arjan's report (WAM) and quoted by the "Federal Center for Competitiveness and Statistics" (FCSC), the UAE's real GDP in the second quarter of this year reached 476.9 billion dirhams, with a decrease of 2.1% compared to the same period last year. Non-oil activities also decreased by 1.1% in the second quarter because regional developments and disruptions in commuting had a negative impact on the tourism, transportation and trade sectors.

The share of non-oil sectors in the UAE's GDP increased to 79.2% in the first half of this year compared to 78.1% in the same period last year. Petroleum activities made up the remaining 20.8%.

The International Monetary Fund said in July that the UAE's overall economic growth in 2026 is expected to be slightly lower than in 2025, as uncertainties negatively affect the tourism, transport, trade and real estate sectors.

In the first half of the year, financial and insurance activities recorded the highest growth rate among major economic activities in the UAE with a growth of 14.8%, followed by information and communication activities with a growth of 7.3%.

According to data from the Federal Center for Statistics and Competitiveness (FCSC), the health and social services sector grew by 6 percent, followed by construction (5.1 percent), government activities (3.6 percent) and real estate activities (2.3 percent).

According to Arab News, the trade sector took the largest share of non-oil GDP with a share of 16.2 percent, followed by financial and insurance activities (15.2 percent), construction (13.1 percent), industrial production (11.8 percent), and real estate (7.9 percent).