UAE grapples with war-driven tourism slump while banking on resilient fundamentals

Since Iran launched attacks on regional allies after February’s strikes, Dubai’s hotel market collapsed, with occupancy dropping to around 10% and some properties shutting for renovations. To cushion the blow, the UAE introduced a $680 million support package covering hotels, restaurants and private schools, while also offering residents a stay-cation incentive worth about $800. The central bank’s recent request for a currency swap line with the United States sparked debate, with officials insisting it reflects confidence rather than need.

Economic forecasts predict a decline in foreign direct investment and a dip in GDP, and inflation pressures are rising due to disruptions like the Strait of Hormuz blockage. Nonetheless, sectors such as finance and government-linked activities remain robust, and experts believe the economy can recover once hostilities subside.