UAE Central Bank Cuts 2026 Growth Forecast to 1.6% but Banking Assets and Insurance Premiums Keep Growing

The Central Bank of the UAE has sharply lowered its outlook for the country's economy in 2026, even as its latest figures show banks and insurers continuing to grow. The September 2026 Quarterly Economic Review, published by the central bank, forecasts real GDP growth of 1.6% for 2026 and 10.4% for 2027. This changes the picture presented in earlier coverage. Previous reports, including an earlier version of this article, cited a central bank projection of about 5.6% growth for 2026. That figure came from the central bank's spring annual report, reported by Gulf News on April 9, 2026, and it has since been superseded. The June review, reported by Gulf News on June 30, had already cut the 2026 forecast to 1.7%, with 9.8% for 2027.

Start with the growth outlook. According to the September review, hydrocarbon GDP is forecast to grow 2.4% in 2026 and 26.8% in 2027, when output is expected to reach 5 million barrels a day, and non-hydrocarbon GDP is forecast to grow 1.3% in 2026 and 4.9% in 2027. The review explains that the 2027 rebound reflects an expected normalisation of oil production, supported by fiscal buffers, low public debt, the central bank's Financial Institution Resilience Package, a Dubai initiative of AED 2.5 billion and infrastructure spending. It also reports that first-quarter 2026 real GDP grew 3.0% year on year and non-oil GDP grew 4.8%, while hydrocarbon activity fell 3.5% because of a temporary output cut in March. The June coverage by Gulf News attributed the 2026 slowdown to regional developments weighing on trade, shipping, tourism and private-sector confidence. The review adds that the GCC region is expected to moderate in 2026 because of temporary effects on energy production and transport linked to regional developments, before improving in 2027. It cites the International Monetary Fund's July 2026 update, which projects global growth of 3.0% for 2026 and says geopolitical developments continue to add uncertainty.

The banking figures are from the end of the second quarter of 2026. Total banking assets were AED 5,594 billion, up 12.5% year on year. Gross credit was AED 2,758 billion, up 18.1%. Deposits were AED 3,473 billion, up 14.0%, with resident deposits up 14.1%. Capital adequacy was 17.0%, down slightly from 17.3% a year earlier, and the common equity tier 1 ratio was 14.5%. Asset quality remained strong, with a net non-performing loan ratio of 1.3% and a gross ratio of 2.8%, both the lowest in the period shown. An earlier version of this article cited first-quarter figures of AED 5.56 trillion in assets and 17.7% asset growth, and these have now been replaced by the newer data. The central bank also notes that regional developments did not materially affect the banking system's growth momentum or core indicators in the first quarter.

The insurance data cover the first half of 2026. Gross written premiums were AED 45.4 billion, up 11.0% year on year. Health insurance premiums rose 11.4% to AED 23.0 billion, property and liability premiums rose 6.0% to AED 17.2 billion, and the category of persons and fund accumulation rose 28.8% to AED 5.2 billion. Gross paid claims were AED 25.5 billion, up 18.7%, which is faster than premium growth. Technical provisions, the reserves insurers hold to meet future claims, were AED 106.9 billion, up 6.8%, and total equity rose 15.6%. The earlier version of this article cited premium growth of about 15%, which matches 2025 full-year data reported in April, but the half-year pace is slower.

Prices are rising faster in some places than the national forecast suggests. The central bank forecasts consumer inflation of 2.4% in 2026 and 1.9% in 2027, below global averages. However, the review reports that Dubai's consumer price index accelerated to 5.3% year on year in the second quarter from 3.3% in the first quarter, with transportation up 15.1% and housing, water, electricity and gas up 7.3%, as were food and beverages. The review attributes the pressure to energy costs, shipping and global food prices.

How can the sector grow while the economy slows? The two measures describe different things. Banks lend against assets, trade and government spending, and credit growth of 18.1% shows continuing demand for loans, supported by strong capital and low bad-loan ratios. Overall GDP growth in 2026 is held down by the temporary cut to oil output, which affects the hydrocarbon sector heavily, and by regional disruption to trade and tourism. That combination can persist for a time, but it is also a reason for caution. Faster claims than premiums in insurance, and credit growth outpacing deposit growth, are indicators that supervisors will watch.

What should readers take from this? For businesses and households, the central bank's data suggest the financial system is well capitalised and able to keep lending, but a forecast of 1.6% growth is weak by UAE standards and the expected 2027 rebound depends on oil output recovering. For investors, the difference between the April and September forecasts is a reminder to use the latest publication. All figures here come from the central bank's review or from coverage of its earlier releases, and forecasts are not guaranteed. Readers should consult the full review before making financial decisions.