United Arab Emirates

Growth in 2026 mainly led by non-oil sector, geopolitical risks eyed

Growth in the non-oil sector is expected supporting economic expansion in 2026, with wholesale and retail trade, transportation, construction and financial services remaining key drivers. Resilient domestic consumption, ongoing investment and a steady pipeline of public and private projects should keep non-oil activity supportive. Economic diversification reforms will further reinforce this momentum, as the authorities continue to develop higher-margins sectors such as manufacturing, technology and financial services, alongside logistics and tourism. Complementary initiatives including investment in ports and supply chains, industrial zones, and incentives to attract fast-growing segments such as AI and data centres would further strengthen the UAE’s position as a diversified and competitive economy. However, heightened regional geopolitical tensions following the war involving Iran could weigh on economic momentum through weaker tourism inflows, more cautious investor sentiment and potential disruption to maritime trade routes. Any escalation affecting key port infrastructure or shipping lanes would also pose risks to the UAE’s role as a major regional re-export and logistics hub centred on Dubai. The 2026 outlook for oil production (around 25% of GDP) remains broadly positive, although gains may soften early in the year amid weaker oil prices and a pause in further OPEC+ quota increases. UAE crude output has already risen from around 2.9 million barrels per day (b/d) in late 2024 to about 3.4 million b/d by late 2025, reflecting the gradual unwinding of earlier OPEC+ output cuts, with the country’s production ceiling becoming less restrictive from October 2025 onward. Output growth could strengthen again later in 2026 as market conditions stabilise. The gas sector is transitioning into a new growth phase, driven by ADNOC-led projects aimed at increasing domestic supply and strengthening the role of gas in the national energy system. Domestic gas production is expected to continue expanding, supporting the country’s long-term energy security objectives.

Inflation in the UAE is expected to remain relatively contained in 2026, supported by the exchange-rate peg to the US dollar and generally moderate imported inflation, although service prices could stay firmer in areas such as housing and selected domestic services. In addition, as the UAE remains highly dependent on food imports, disruptions to shipping routes and higher transportation costs could also contribute to rising food prices and add to imported inflation pressures. With monetary policy effectively aligned with the US Federal Reserve due to the currency peg, interest-rate dynamics in the UAE will continue to largely reflect the Fed’s stance. Against this backdrop, increased regional tensions could also add to global inflation volatility through energy price movements. If this leads the US Federal Reserve to delay monetary easing, interest rates in the UAE would remain elevated due to the currency pef, potentially keeping financing costs relatively high.

Twin surpluses will continue to narrow

The UAE is expected to remain in fiscal surplus in 2026, although the balance is likely to narrow somewhat as hydrocarbon revenues ease and public spending remains elevated to support growth and diversification objectives. Even so, the fiscal stance should remain comfortable, underpinned by a diversified revenue base (with non-oil revenues accounting for roughly half of total government income), sizeable sovereign assets (estimated at around 500% of GDP as of end-2025) and strong market access. Higher oil prices could provide support to fiscal revenues. However, elevated regional geopolitical tensions following the war involving Iran may increase volatility in energy markets and create risks for oil export flows, potentially limiting contribution of hydrocarbon revenues to the total budget revenues.The federal government has established a sovereign bond programme since 2021 and has raised funding through both domestic dirham-denominated bonds and sukuk as well as international issuance; in 2025, domestic treasury sukuk issuance reached around USD 1.8 billion. Together, these buffers are expected to provide the authorities with sufficient flexibility to absorb oil-price volatility while continuing targeted investment in infrastructure and strategic sectors.

The UAE’s external position is expected to remain strong in 2026, although the current account surplus may narrow somewhat as softer oil prices and robust import demand linked to growth and investment weigh on the headline balance. However, the closure of the Strait of Hormuz and the war in the region would have a negative impact on hydrocarbon exports and tourism revenues, putting pressure on the current account surplus. Foreign currency liquidity is underpinned by large official reserves held by the central bank (around USD 260–275 billion, equivalent to roughly 30–35% of GDP as of late 2025), complemented by very large sovereign wealth assets, which together are expected to anchor confidence in the dirham’s peg and limit external vulnerability even under less favourable global or oil-market conditions.

Domestic stability in a volatile region

Despite a stable domestic political environment, the UAE continues to face major geopolitical risks stemming from regional tensions and global fragmentation. The war in Iran has heightened uncertainty across the Middle East and raises the risk of a broader and more prolonged period of regional instability. Such developments could disrupt regional security conditions, energy markets and maritime trade routes. The UAE remains particularly exposed to disruptions affecting keyu shipping corridors including the Strait of Hormuz, the Red Sea and the Gulf of Aden. Any sustained interruption of shipping lanes or attacks affecting major port infrastructure would weigh on logistics activity, re-exports and trade-related services, which are central to the UAE’s non-oil growth model and its role as a regional re-export hub. On the other hand, the UAE operates in a regional environment where its geopolitical priorities are not always fully aligned with those of Saudi Arabia, which is another important regional power. Differences in strategic emphasis are more pronounced in Yemen where the UAE seem to prioritise maritime security while Saudi Arabia focuses more on border and conflict management. In addition, broader regional tensions involving Israel and neighbouring countries could heighten uncertainty. Although the UAE has sought to preserve diplomatic and economic ties following the Abraham Accords, renewed escalation could hamper regional cooperation and raise security risks. Last, the UAE faces geopolitical spillovers from global fragmentation, including US-China rivalry, sanctions regimes and trade restrictions which could complicate financial flows, re-exports, technology transfers and investment decisions. While the UAE’s diversified economy, strong external buffers and neutral diplomatic positioning help mitigate these risks, geopolitical developments remain a key risk factor for the 2026 outlook. The UAE has also expanded its economic footprint beyond the region, notably through investments in logistics and port infrastructure in Africa, led by state-linked operators. Those initiatives primarily reflect commercial and trade-related objectives. In parallel, the UAE maintains close security cooperation with the US, including a limited US military presence, which underpins broader defence and strategic ties between the two countries.

2022

Payment

The most common methods of payment in the United Arab Emirates (UAE) are cash, credit and debit cards, Open Accounts, Letters of Credit, Documentary Collections, and cheques.

Cheques are the most common and preferred method of payment in the country, especially in commercial transactions, as there are no costs involved with issuing cheques, unlike transactions that are backed by a Letter of Credit or any other type of a bank guarantee. Cheques constitute a reliable debt recognition title that may be enforced directly before a judge. In addition, UAE criminal law states that a person who delivers a cheque in bad faith without sufficient consideration may be imprisoned.

Until 2016, post-dated cheques were considered the best protection against late payments, and were frequently used in the UAE as guarantees, as bounced cheques are considered as a criminal offence. The new law is silent regarding Non-Sufficient Funds (NFS) cheques, and only states in Article 32 that all the legal proceedings, procedures, and execution procedures against the debtor’s assets shall be suspended once a decision is initiated until the ratification of the scheme of composition. Composition is defined in Article 5 of the new law as proceedings aiming to assist the debtor to reach a settlement with creditors pursuant to a scheme of composition under the supervision of the court, and with the help of a trustee to be appointed in accordance with the provisions of this law. In light of the above, any claims or legal proceedings filed against the debtor – whether related to NSF cheques or another instrument (this also applies to criminal proceedings relating to NSF or bounced cheques) – will be suspended once the court has accepted the debtor’s application for the aforementioned prevented composition. It worth noting that any claim related to an NSF cheque will be treated in the same way as any other unsecured claim which may be filed against the debtor.

UAE banks are part of the Society for Worldwide Interbank Financial Telecommunication (SWIFT), which is used when transferring money between banks, particularly for international wire transfers.

Debt Collection

Amicable phase

Debt collection begins with the amicable approach, during which the debtor receives a notice for payment, followed by a phone call from the creditor or an agency, with the goal of reaching a payment agreement.

Legal proceedings

The UAE Courts are comprised of: the Court of First Instance; the Court of Appeals; the Abu Dhabi Supreme Court.

Located in each Emirate, courts of first instance have general jurisdiction and include a Civil Court, a Criminal Court and a Shariah Court. Following a judgement from one of these courts, the concerned parties have the right to appeal to the Court of Appeals on factual and/or legal grounds. Following this, aggrieved parties have the right to appeal to the Supreme Court on matters of law only. Shariah Court handles civil matters between Muslims.

Fast-track proceedings

An order of payment is a procedure where a party applies to the courts for summary judgment against a defendant for commercial debts, substantiated by a valid but unpaid commercial instrument such as a bill of exchange, promissory note or cheque. If a defence is filed, the dispute must be solved via an ordinary lawsuit before the court of first instance.

Ordinary proceedings

Proceedings start by filing a plaint (complaint) in the relevant court. It must meet procedural requirements, and include both the debtor’s information and the details of the debt. The court issues a summons to be served to the defendant, which includes an endorsed hearing date.

Once an answer has been filed by the debtor, the trial process is adjourned to allow the creditor to respond. Further adjournments are given so that memoranda can be submitted by both parties. Once the court believes that the case has been sufficiently pleaded, it reserves the matter for judgment. The entire proceeding is based on written submission supported by documentary evidence. The court will issue remedies in the form of specific actions and compensatory damages. Injunctive relief is not generally available and attachment orders are difficult to?obtain.

0

Enforcement of a Legal Decision

A court judgment becomes enforceable once it is finalised. If the debtor fails to comply with the court’s decision, the creditor may request enforcement mechanisms before the judge, such as an attachment order, or even the imprisonment of the debtor.

Any foreign awards must first be recognized as a domestic judgment. When bilateral or multilateral reciprocal recognition and enforcement treaties exist, this requirement is simply a formality. In the absence of such agreements, an exequatur procedure is provided by domestic private international law.

The latest law update in UAE is related to commercial claims, which can now be filed via performance order lawsuits if the financial claim is subject to the enforcement of a commercial contract, or the right holder is a creditor with a commercial paper and debt is acknowledged.

Procedures and Duration of Order: Sending a notary public legal notice to the debtor. Notifying the notice to the debtor with a successful result. Five days minimum from the date the debtor receives the notice as a period to allow the debtor to settle the dues. Register the Performance Order at the court or on the electronic system of the court according to the spatial jurisdiction of each court. The decision shall be issued by the judge within 3 working days by either acceptance or rejection. In case of issuance of the decision in creditor favor, a request to notify the debtor shall be submitted. The court shall notify the debtor in the manner prescribed by the law. An appeal period of 15 days from the date of the decision is notified if the debtor will appeal. The appeal court will review the debtor defense if it’s valid the court will schedule a hearing and invite both parties to investigate, if the court see the defense is not valid, the court will reject the appeal directly. If the debtor didn’t appeal in a period of 15 days from the date, he receives the decision notice, then the execution shall take place. Duration of the whole process approximately: 90 to 120 days.

Insolvency Proceedings

On September 4, 2016, the final draft of the Federal Law on Bankruptcy was approved. The new insolvency law proposes three new insolvency procedures:

FINANCIAL REORGANIZATION PROCEDURE

An out of court, private conciliation process that is applicable to entities who have not yet formally entered the zone of insolvency, which has the aim of achieving a consensual, private settlement between parties. An independent mediator with bankruptcy expertise is appointed by the commission for a period of up to four months to oversee discussions between the debtor and its creditors.

PROTECTIVE COMPOSITION PROCEDURE (PCP)

A debtor that is (a) experiencing financial difficulties, but is not yet insolvent; or (b) has been in a state of over-indebtedness or cessation of payments for less than 45 days, proposes a compromise with its creditors outside of formal bankruptcy proceedings. The PCP includes a moratorium on creditor action (including enforcement of secured claims) and places the debtor under the control of an office holder appointed from the Commission’s (the government agency that has the authority to oversee the insolvency proceedings) roll of experts, for an initial observation period of up to three months.

Other key tools of the PCP process include the ability to raise debtor-in-possession (DIP)-style priority funding, which may be secured on unsecured assets or take priority over existing security, and ipso facto previsions that prevent the invocation of insolvency-linked contractual termination provisions – provided the debtor performs its executor obligations. The debtor is given time to file a plan, which is then voted on by creditors.

BANKRUPTCY

The procedure is split into two elements: a rescue process within formal bankruptcy proceedings, which is procedurally similar to the PCP (including an automatic moratorium and the ability to raise DIP funding);a formal liquidation procedure.

RECENT UPDATE TO BANKRUPTCY LAW:

Various changes announced on 22 October 2020, but yet to be published in the official gazette. Key change – New Concept: “Emergency Financial Crisis” (EFC), which is defined as: “A general situation that affects trade or investment in the country, such as a pandemic, natural or environmental disaster, war, etc. ”New provisions changing the Bankruptcy Law during an EFC.UAE Cabinet to determine when an EFC exists and it has yet to do so. It would appear that a UAE Cabinet decision is required before parties can rely on the new provisions; If an EFC is announced, the new law provides certain protections for debtors, including: Debtors not required to file for bankruptcy if he has failed to pay his debts within 30 days due to EFC; Debtors can still file for bankruptcy during EFC and court may elect not to appoint a trustee in the proceedings if debtor proves the disruption to his business was caused by the EFC; Creditors cannot file as the court will not accept bankruptcy applications against any debtors during the EFC.

Settlement with creditors (only applies to debtor filings):

If bankruptcy is accepted by court, the debtor may request 40 business days to negotiate settlement with his creditors. If approved by the court, it shall be published and include an invitation to creditors to negotiate settlement within 20 business days; Settlement period offered to creditors shall not exceed 12 months; If settlement reached with creditors with 2/3rds of the debt, it shall be binding on all creditors (even those who did not participate); Settlement negotiations must be in writing and approved by the court.

Last updated: March 2026