Shifting global supply chains, buoyant domestic market to provide support 

Dubai, United Arab Emirates: Standard Chartered Global Research (“SC Global Research”) has raised its 2026 GDP growth forecast for the UAE to 5.0%, up from its previous 4.0% estimate. This revision suggests that the UAE is set to outperform the wider global economy, which is projected to grow by 3.4% next year.

In its latest Global Focus report, SC Global Research attributes the UAE’s economic momentum to shifting global supply chains and a buoyant domestic market, which are expected to offset the impact of softer oil prices. Amid a more fragmented global trade landscape, the Bank forecasts the UAE’s total foreign trade to hit the USD1 trillion mark in 2026, with the critical UAE-Asia corridor contributing one-third of that volume. Additionally, strong non-oil activity, fuelled by favourable demographics and a thriving property sector, is expected to expand by 4.5% next year.

Rola Abu Manneh, CEO of UAE, Middle East & Pakistan at Standard Chartered, commented: “The UAE remains a bright spot on the global map, with the nation expected to remain on track to deliver growth at potential for two consecutive years in 2026. As we look toward the projected USD1 trillion in foreign trade volumes, the UAE is rapidly cementing its status as a super-connector, navigating seamlessly through global trade fragmentations and thriving within them.”

The UAE is expected to maintain twin surpluses, supported by deep domestic liquidity. With deposit growth currently outpacing strong private-sector credit expansion of 9.1% y/y in mid-2025, the nation boasts the lowest loan-to-deposit ratio in the GCC. This headroom provides UAE banks with cross-border lending opportunities, particularly in Saudi Arabia where interbank interest rates remain elevated.

Turning to the outlook for major economies, SC Global Research raises its US growth forecast for 2026 to 2.3% (from 1.7%), as it expects strong business investment and spending, supported by corporate tax cuts and the race for AI adoption. It also expects the labour market to start to recover in H2-2026 on loose financial conditions and strong domestic demand, and as firms adapt to higher tariff levels.

SC Global Research recently raised its 2026 growth forecast for China to 4.6% from 4.3%. Fears that US trade policy would damage China’s exports have proved largely unfounded so far, and 2025 growth is on track to reach 4.9%. Export growth is likely to moderate in 2026 as front-loading fades, but it should remain supported by the recent US-China trade truce and ongoing diversification of export markets. Risks to trade relations with the US remain high, however, especially in the run-up to the US midterm elections.

The Euro-area growth forecast for 2026 has been raised marginally to 1.1% from 1.0% due to carryover effects. However, the region’s growth prospects are muted given trade pressures – both from US tariffs and increasing competition from China – and the uneven picture across euro-area economies. For Asia, growth in export-oriented economies has held up much better than feared in 2025 thanks to strong front-loading of exports to the US. It is expected that this front-loading activity will fade in 2026, implying less support for growth from the external sector. Political uncertainty may also weigh on growth in some countries, such as Thailand and the Philippines. As a result, Asia is one of the few regions where growth may moderate in 2026 versus 2025.

Madhur Jha, Global Economist & Head, Thematic Research, commented: “While the 2026 growth outlook is benign, it comes with elevated risks from multiple sources. Geopolitical risks abound, arising not just from key upcoming elections and ongoing conflicts, but also from the rise of alliances that aim to challenge the US-led world order.

“Not all risks are to the downside. AI-related productivity gains might start to filter through faster than currently expected, lifting growth not just in the US and China but also globally. While tariffs are unlikely to be lowered further, global trade growth could remain resilient as the diversification of trade partners allows other economies to gain a bigger share of trade-related economic gains.”