Economy holds firm but IMF warns of UAE property slowdown
Banking’s exposure is ‘contained’GDP may be ‘slightly’ below 2025Praise for state policies during conflictTheUAE economyhas remained resilient despite theIran conflictand the effective closure of theStrait of. . .
Banking’s exposure is ‘contained’GDP may be ‘slightly’ below 2025Praise for state policies during conflictTheUAE economyhas remained resilient despite theIran conflictand the effective closure of theStrait of Hormuz, but the cooling real estate market warrants attention, the International Monetary Fund said on Friday. Real estate activity slid in the first half of 2026 after several years of strong growth, though the impactdiverged between segments and locations, the IMF found. Prices broadly remained at or above last year’s levels. “While the banking sector’s exposure to real estate is contained, evolving market conditions warrant continued monitoring,” said Said Bakhache, the IMF’s mission chief for the UAE,after leading a staff visitto Abu Dhabi and Dubai this month. Banks retainrobust capital buffers and liquidity, although the latter has “tightened” since the US-Israeli war with Iran began on February 28. “Private sector credit growthis expected to moderate, reflecting a slowdown innon-hydrocarbon activity,” Bakhache said in a statement. Overall, the UAE’s strong economic fundamentals, advanced preparations and swift policy response have largely mitigated the shock so far, he added. Bakhache praised the authorities’ “timely and well-targeted support measures” to protect financial stability, supply chains, vulnerable sectors and households, and market confidence. However, geopolitical uncertainty in the region remains high and continues to weigh on industries such astourism,transportation,tradeand real estate. The IMF predicts that overallgross domestic productthis year will be slightly below its 2025 level, before a significant rebound in 2027, if the US and Iran find a gradual path toward normalisation. Further reading:Abu Dhabi rent freeze signals a city under housing pressureIran war relief: 3 UAE property measures everyone should knowDubai mortgage value rises despite property slowdown“Hydrocarbon growth is expected to pick up in the second half of the year, as recovering oil exports and the ramp-up in production following theUAE’s exit from Opecmore than offset conflict-related disruptions,” Bakhache said. The UAE’sfiscal and external balancesare forecast to narrow but remain in surplus, leaving the authorities with the fiscal space and international reserves needed to manage an even longer conflict. “In view of the elevated uncertainty weighing on projections, and the considerable upside and downside risks, economic policies should remain agile,” Bakhache said. “Advancingdiversificationand continued structural reforms remain key to sustaining growth. ”