UAE Growth 2026: FAB Forecasts 5.6% Expansion Amid Diversification And Policy Reforms

First Abu Dhabi Bank’s Global Investment Outlook 2026, "Shifting Currents: Recalibrating Capital Amid a Changing Global Economic Order," suggests 2026 becomes a turning point for capital allocation. FAB expects diverging growth paths, a reset in global risk conditions, and policy shifts that require investors to rethink portfolio construction and risk management strategies.

The report projects global GDP growth of 3.1 percent in 2026, slightly below the 3.2 percent estimate for 2025. FAB describes a world economy that keeps expanding but with less balance, as the forces driving demand and supply change and the room for policy or market error becomes more limited.

Growth is set to differ sharply between regions in 2026. Advanced economies are expected to expand by about 1.5 percent, while emerging markets, especially the GCC and Egypt, are forecast to exceed 4 percent. FAB identifies the GCC as a relative anchor for growth and stability within this uneven global landscape.

The UAE is expected to post one of the strongest performances in the region, with real GDP growth around 5.6 percent. FAB attributes this trend to ongoing economic diversification, structural reforms, and steady investment activity. Non-oil sectors, backed by policy initiatives, are projected to support the broader regional growth momentum.

FAB anticipates that 2026 will be defined by cautious and gradual monetary policy moves worldwide. Inflation has eased from earlier highs but remains a central risk due to geopolitical uncertainty and persistent supply constraints. Interest rate cuts in the United States are expected to occur more slowly than in 2025, with inflation still the main macro concern.

Technological change features strongly in the Global Investment Outlook 2026. FAB notes that artificial intelligence, automation, and digital platforms are speeding up structural change across wealth and asset management. These technologies are reshaping how capital is deployed, how products are designed, and how investors access markets and advisory services worldwide.

Global Investment Outlook 2026 for GCC capital allocation and diversification

The report explains that the GCC is deepening institutional frameworks, advancing regulation, and gaining weight in global capital allocation. Asset managers in the region are responding to stronger demand for professionally managed solutions, enhanced governance standards, and a wider range of investment products, reflecting the maturing role of GCC capital in global markets.

FAB emphasises that diversification stays central to sound portfolio design and risk control in 2026. In a world of structural change and elevated uncertainty, diversified portfolios help reduce downside risk while still allowing investors to benefit from opportunities across cycles, asset classes, and regions, including the relatively resilient GCC and wider emerging markets.

Overall, FAB’s Global Investment Outlook 2026 portrays a global environment in transition, where growth persists but becomes more uneven, policy remains cautious, and technology reshapes finance. Within this setting, the GCC and the UAE in particular are presented as important growth hubs, while disciplined, diversified portfolio strategies remain essential for managing risk and opportunity.

With inputs from WAM