UAE GDP advances 0.4% despite second-quarter contraction

The UAE economy expanded by 0.4 per cent in the first half of 2026, reaching Dh961.9 billion in real gross domestic product, as non-oil activities sustained growth despite a contraction during the second quarter.

Figures released on Friday by the Federal Competitiveness and Statistics Centre (FCSC) showed that non-oil GDP increased by 1.8 per cent compared with the corresponding period of 2025, lifting its contribution to the national economy to 79.2 per cent from 78.1 per cent a year earlier.

The figures also revealed pressure on economic activity during April-June, when real GDP declined by 2.1 per cent year on year to Dh476.9 billion. Non-oil activities contracted by 1.1 per cent during the quarter, reflecting disruptions affecting tourism, transport and trade.

The centre attributed the quarterly weakness to regional developments and interruptions to travel, which affected several sectors dependent on cross-border movement and commercial activity. The contraction contrasted with the positive performance recorded across the first six months.

The first-half expansion nevertheless demonstrated the contribution of activities outside hydrocarbons to overall economic output. Oil-related activities accounted for 20.8 per cent of real GDP, compared with the substantially larger contribution from non-oil industries.

Financial and insurance activities registered the strongest growth among major economic sectors, expanding by 14.8 per cent during the first half. The performance placed financial services ahead of other principal contributors to the country’s non-oil economy.

Information and communication activities recorded growth of 7.3 per cent, followed by health and social work activities, which expanded by 6 per cent. Construction increased by 5.1 per cent, while government activities grew by 3.6 per cent.

Real estate activities posted growth of 2.3 per cent, adding to the expansion recorded across several non-oil industries. The sectoral figures indicated differing rates of growth within an economy facing weaker conditions during the second quarter.

Trade remained the largest contributor to non-oil GDP, accounting for 16.2 per cent of output generated outside the hydrocarbons sector during January-June. Financial and insurance activities followed with a contribution of 15.2 per cent.

Construction represented 13.1 per cent of non-oil GDP, while manufacturing contributed 11.8 per cent. Real estate activities accounted for another 7.9 per cent, according to the statistical centre’s breakdown.

Together, these five sectors represented 64.2 per cent of non-oil economic activity, illustrating their collective importance to the country’s production, investment and services base.

The difference between sectoral growth rates and their contributions to GDP also highlighted the varied structure of economic activity. Financial services recorded the fastest expansion, while trade retained the largest share of non-oil output.

The FCSC said the results reflected continued diversification of the UAE’s economic base, with a growing contribution from activities spanning commerce, finance, construction, manufacturing and property.

The centre emphasised that the expansion of non-oil industries demonstrated the diversity of economic growth drivers, even as the second-quarter figures showed the effects of external disruptions on particular activities.

The data provide a more differentiated picture of economic performance than the modest overall growth rate alone. While the six-month figures remained positive, the contraction during the second quarter exposed the sensitivity of tourism, transportation and trade to interruptions affecting regional travel and commercial links.

The first-half GDP figure was calculated at constant prices, allowing changes in economic output to be assessed without the distortions associated with movements in prevailing prices.

The statistical centre described the first-half and second-quarter results as preliminary estimates, prepared using the methodologies and historical time series currently employed in compiling national accounts.

It also highlighted the importance of reliable economic statistics in identifying changes across industries and establishing the relative contribution of different activities to national production.

Such measurements provide government institutions with information for economic planning and policy decisions, particularly when sectoral performance diverges from broader national growth trends.

The FCSC is working with partners across the national statistical system on the UAE Comprehensive GDP Revision Programme, which involves updating the country’s national accounts and associated historical economic data.

The revised national GDP time series is scheduled for release following approval of the comprehensive revision results during the first quarter of 2027. The programme will provide an updated statistical basis for assessing economic performance across successive reporting periods.