Iran War Disruption Weighs on Dubai Economy

The Iran war disrupted travel and trade across the region in the first half of 2026, weighing on Dubai’s tourism and transport activity as the emirate’s economy contracted in real terms. Dubai’s economy stood at Dh473 billion, down 2.3 per cent from Dh484 billion in the same period last year, according to figures the Dubai Data and Statistics Establishment at Digital Dubai released Sunday.

Regional Disruption and Economic Impact

The real GDP decline reversed the 2.4 per cent annual growth recorded in the first quarter, when the economy reached Dh232 billion despite regional economic challenges. GDP at current prices, however, rose 0.2 per cent to Dh505 billion. The UAE economy grew 0.4 per cent in the first half as the Iran war disrupted activity.

Tourism and transport felt the effects of disrupted regional travel and trade. Transport and storage fell 7.4 per cent in real terms. Wholesale and retail trade, Dubai’s largest economic activity, contracted 6 per cent but still made up 20.5 per cent of GDP. Other sectors also showed weakness, while financial services, healthcare and construction expanded.

Helal Almarri, director general of the Dubai Department of Economy and Tourism, said: “Dubai's H1 2026 GDP performance reflects the strength and adaptability of an economy built to navigate periods of significant global uncertainty.” He said growth across strategic sectors demonstrated the strength of the emirate’s economic fundamentals and its focus on long-term development.

Financial and Essential Sectors Expand

Financial and insurance activities grew 8.8 per cent in real terms to Dh65.9 billion, up from Dh60.6 billion a year earlier. The sector’s share of GDP climbed to 14 per cent from 12.5 per cent. The Dubai International Financial Centre continued to draw international financial institutions, with more than 10,000 companies operating at the hub in the first half of the year.

Healthcare and social work posted the fastest growth. The sector expanded 14.3 per cent. Information and communication activities increased 2.7 per cent. Construction grew 2.4 per cent in real terms and generated Dh33.2 billion in value added, while government services expanded 2.9 per cent.

Other sectors declined. Real estate contracted 2.5 per cent in constant prices, despite growing 5.4 per cent at current prices. Manufacturing fell 0.9 per cent in real terms. The figures put those declines alongside growth in healthcare, finance, construction and government services during a period of regional economic challenges.

Projects and Economic Support

Dubai is moving ahead with Dh2.1 trillion in projects covering housing, aviation and transport, including expansion of Al Maktoum International Airport. Dubai CommerCity announced a Dh1.8 billion expansion this month, aimed at boosting digital commerce and attracting technology investment.

Dubai is also pursuing its D33 economic agenda to strengthen its position as a global business and investment centre. In May, the emirate announced a Dh1.5 billion economic relief package to support sectors affected by regional uncertainty. The projects and measures come as first-half figures register the effects of war-related disruption to travel and trade, with transport and retail among the sectors reporting real-term contractions.