Capital Economics says Dubai authorities are ‘doing all the right things’ as construction, trade, tourism and the wholesale and retail sectors recover.
Dubai is well positioned to emerge from the Iran war with its status as the Gulf’s leading financial and commercial hub intact, according to a new report from Capital Economics.
In their analysis, William Jackson, chief emerging markets economist, and Jason Tuvey, deputy chief emerging markets economist, said the authorities “seem to be doing all the right things”, adding that early signs of recovery are encouraging.
Growth across some of Dubai’s non-oil sectors slowed following the outbreak of the regional conflict on February 28. However, measures introduced by the authorities are helping the emirate’s economy return to its previous growth trajectory.
Dubai has demonstrated resilience through major economic disruptions, including the 2008-09 global financial crisis and the Covid-19 pandemic. Its recoveries have been supported by business-friendly economic policies, innovative initiatives, residency programmes and measures aimed at strengthening the private sector.
The emirate has also introduced more than Dh2.5 billion in economic incentives in response to regional crises, providing support to local businesses and the hospitality sector while helping strengthen corporate liquidity.
Recovery
The economists highlighted several indicators suggesting that Dubai’s economy is gaining momentum.
The S&P Global Dubai Economy Trackers for August pointed to recoveries across construction, wholesale and retail trade, and tourism.
Activity in the financial sector has also remained robust, with strong fixed-income issuance and healthy trading volumes across equity and bond markets.
The report noted that Dubai’s banking sector remains well capitalised, while government-related entities have reduced their debt levels since the 2009 financial crisis.
Signs of improving confidence are also emerging, with the report pointing to the large number of residency permits issued in 2026 as more people relocate to the emirate.
Capital Economics also highlighted the New Civil Code, which came into force in June, describing it as a widely welcomed modernisation of the legal framework governing contract enforcement.
The report further cited more flexible UAE visa regulations, including easier extensions and streamlined entry routes for jobseekers, property investors and family members.
Dubai’s institutional framework has remained resilient despite the war, according to the report. Addressing growing competition from Riyadh, Capital Economics said the outlook “looks favourable” for Dubai, citing its stronger starting position and its appeal to international workers.
The economists added that measures being taken by Dubai’s authorities are aligned with the D33 economic agenda, which seeks to double the size of the emirate’s economy between 2023 and 2033 and position Dubai among the world’s top four financial hubs.
