Residents in Dubai and Abu Dhabi are experiencing a 'new normal' this September, as the usual post-summer rush tests the UAE's economic resilience amid a protracted regional conflict. Despite the ongoing war, some sectors like finance are showing strength, with Abu Dhabi's wealth funds actively investing and Dubai International Financial Centre surpassing 10,000 active companies. Dubai's population has also grown significantly, adding around 200,000 residents this year to reach 4.58 million by the end of 2025.
However, challenges persist, particularly for sectors exposed to the conflict. Disruptions in the Strait of Hormuz have led to increased import costs and fuel prices, with gasoline prices climbing about 60% since the war began. Airport traffic at Dubai International Airport fell by almost a third in the first six months, and hotel occupancy in Dubai dropped to around 64% in August from 76% a year prior. Property sales have also slowed, though sellers are largely avoiding price cuts.
Economists have varied outlooks. While the central bank anticipates GDP growth to slow to 1.7% this year, a Bloomberg survey of economists projects a rebound of approximately 7% in 2027. Experts note that more insulated sectors like financial services and government-linked activities are partially offsetting losses in affected areas like retail, transport, and tourism. The UAE's stock markets have also shown resilience, with Dubai's benchmark index 3% above its pre-conflict level and Abu Dhabi's index gaining over 1%.
To mitigate economic impacts, the UAE implemented a $680 million package to support affected sectors, including exemptions from municipality costs for hotels and restaurants. Officials are also incentivizing tourism and housing, and sovereign entities are increasing dealmaking, leading to headcount growth in firms working with them. Despite the challenges, the UAE's fundamental strengths, including its business-friendly regulations and global aviation hub status, are expected to continue attracting capital and talent.
