Dubai GDP Falls 2.3% as Iran War Hits Trade

Dubai’s economy contracted 2.3 per cent in real terms in the first half of 2026, reaching Dh473 billion as the Iran war disrupted regional travel and trade, weighing on tourism and transport. The Dubai Data and Statistics Establishment at Digital Dubai released the figures Sunday. They compare with Dh484 billion in the same period last year.

The decline reversed the 2.4 per cent annual growth recorded in the first quarter, when the economy reached Dh232 billion despite regional economic challenges. Gross domestic product at current prices, by contrast, rose 0.2 per cent to Dh505 billion.

War Disruption and Sectoral Declines

Wholesale and retail trade, Dubai’s largest economic activity, contracted 6 per cent in real terms. Even so, it accounted for 20.5 per cent of GDP. Transport and storage fell 7.4 per cent, while real estate contracted 2.5 per cent in constant prices despite growing 5.4 per cent at current prices. Manufacturing declined 0.9 per cent in real terms.

The Iran war began on February 28, 2026, disrupting regional travel and trade during the first half of the year. Tourism and transport felt the effects. The UAE economy grew 0.4 per cent in the first half amid the effects of the war.

Financial and insurance activities expanded 8.8 per cent in real terms to Dh65.9 billion, up from Dh60.6 billion a year earlier. The sector’s share of Dubai’s GDP rose to 14 per cent from 12.5 per cent.

Growth in Finance, Health and Construction

The Dubai International Financial Centre continued to attract international financial institutions. More than 10,000 companies operated at the hub in the first half of the year.

Healthcare and social work recorded the fastest growth among the sectors listed, rising 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. Government services expanded 2.9 per cent.

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.

Projects and Economic Support

Dubai is proceeding with Dh2.1 trillion in projects covering housing, aviation and transport. The projects include the expansion of Al Maktoum International Airport.

Dubai CommerCity announced a Dh1.8 billion expansion this month, with the stated aims of boosting digital commerce and attracting technology investment. The emirate is also pursuing its D33 economic agenda to strengthen its position as a global business and investment centre.

In May 2026, Dubai announced a Dh1.5 billion economic relief package to support sectors affected by regional uncertainty. The first-half figures show expansion in finance, healthcare and construction, alongside declines in trade, transport, real estate and manufacturing.