Key facts
- Dubai convened hundreds of business leaders following Iran's strikes to discuss economic recovery.
- The meeting prompted measures including a central bank liquidity package and financial support pledges.
- Dubai pledged 2.5 billion dirhams ($681 million) in support for hard-hit sectors like tourism and retail.
- Foreign investor flows into the Dubai Financial Market have shifted from net inflow to outflow.
- Trade flows are rerouting through Oman and Saudi Arabia, bypassing Dubai.
- The UAE central bank provided a relief package backed by over $270 billion in foreign exchange reserves.
Dubai convened hundreds of business leaders in March, shortly after Iran began striking targets across the UAE, to strategize on mitigating economic damage and restoring the city's status as a financial and tourism hub. The meeting, unusual in its scale and timing, prompted measures including a central bank liquidity package and financial support pledges.
Attendees were asked for input on attracting tourists and investors back, and supporting businesses. Dubai has since pledged 2.5 billion dirhams ($681 million) in support, primarily for sectors like tourism and retail. While a preliminary U.S.-Iran peace deal has eased immediate strains, restoring business confidence is expected to take time and may require further incentives.
The meeting signaled authorities' determination to prevent capital flight and an exodus of businesses and investors. It was hosted by Helal Saeed Al Marri, director general of Dubai's Department of Economy and Tourism (DET), and attended by Dubai Crown Prince Sheikh Hamdan bin Mohammed bin Rashid Al-Maktoum, along with prominent figures from real estate, aviation, and finance, as well as representatives from the UAE's military and large family-owned companies.
Government officials assured business leaders of fiscal and financial support and ongoing work on supply chains. Several investor calls have followed, facilitated by banks like JPMorgan and Citi. The DET stated that it maintains regular engagement with stakeholders and that recent instability has underscored the city's resilient economic foundations.
A new government slogan, 'Dubai-it,' has appeared on billboards, aiming to evoke the city's history of rapid execution. Dubai, with oil contributing less than 2% of its GDP, relies on international companies, banks, hedge funds, and wealthy individuals, attracted by its time zone, proximity to sovereign wealth funds, and tax regime. Iran's strikes targeted this financial ecosystem.
HSBC analysts have reduced their 2026 Gulf growth forecast significantly, anticipating a contraction for the region for the first time since the COVID-19 pandemic. Non-oil growth in Dubai and Abu Dhabi could fall substantially year-on-year. The CEO of a UAE investment firm described the second quarter as 'lost,' with recovery expected to be uneven.
While restaurants and flights have largely recovered, hotel occupancy has plummeted, and trade flows are shifting, with cargo increasingly rerouted through Oman and Saudi Arabia to avoid the Strait of Hormuz. Experts suggest targeted support may be needed for sectors like tourism, aviation, and SMEs, with suggestions including increased bank lending and potential tax relief or rebates. Partnering with global private equity firms for asset investment has also been proposed.
Despite the peace accord, challenges persist. Foreign investor flows into the Dubai Financial Market have reversed from a net inflow to an outflow. The UAE central bank's relief package, backed by substantial foreign exchange reserves, aims to safeguard the banking sector. While the current support is dwarfed by pandemic-era measures, longer-term infrastructure projects are underway. The strikes created acute economic pressures, particularly due to the large expatriate population, though the economy is widely viewed as resilient. Future capital return will depend on sustained stability.