UAE economic growth will continue to outpace regional and global peers

The World Bank, in its latest Global Economic Prospects report, forecasts the UAE economy to grow by 5 per cent in 2026, and rising to 5.1 per cent in 2027.

Now falling under the re-named ‘Middle East, North Africa, Afghanistan and Pakistan’ (MNA) region, the rate of growth for the UAE was the fastest among the established economies in the region, with only Qatar outperforming with 5.3 per cent in 2026 and 6.1 per cent in 2027.

Qatar’s GDP growth was 2.8 per cent in 2025, and the UAE’s was 4.8 per cent.

Saudi Arabia, the powerhouse economy of the region, is expected to grow at 4.3 per cent in 2026 and 4.4 per cent in 2027, up from the estimated 3.8 per cent in 2025.

Growth in GCC countries is forecast to increase to 4.4 per cent in 2026 and 4.6 per cent in 2027, “mainly reflecting a steady expansion of non-hydrocarbon activity, in addition to a further rise in hydrocarbon production”.

The bank added: “The strengthening of non-hydrocarbon activity – accounting for more than 60 per cent of GCC countries’ total GDP – is projected to be supported by expected large-scale investments, including in Kuwait and Saudi Arabia. Increases in OPEC+ oil production are expected to continue, contributing to the acceleration of growth, along with the expansion of natural gas production, including in Qatar.”

Growth in GCC countries is forecast to increase to 4.4 per cent in 2026 and 4.6 per cent in 2027, mainly reflecting the steady expansion of non-hydrocarbon activity, as well as a rise in hydrocarbon production.

Growth in non-GCC oil exporters is expected to remain weak at 2.0 per cent a year, on average, in 2026-27, with weakened activity amid tighter trade restrictions and dissipating fiscal support in some countries.

In oil importers, overall growth is projected to inch up to 4.0 per cent a year, on average in 2026–27, but prospects vary by economy. In Egypt, growth is forecast to rise with robust net exports, as well as stronger private demand.

The bank added that downside risks to the growth outlook include “a re-escalation of armed conflicts, elevated violence and social unrest, tighter global financial conditions, further increases in trade restrictions and heightened global trade policy uncertainty, and more frequent or intense disasters stemming from natural hazards”.

For oil exporters, lower-than-expected oil prices or higher oil price volatility could also diminish growth. However, there are also upside risks, including larger-than-expected technology-related productivity gains and a further commitment to structural reforms.

Global economy resilient

The report says the global economy is proving more resilient than anticipated, despite persistent trade tensions and policy uncertainty.

Global growth is projected to remain broadly steady over the next two years, easing to 2.6 per cent in 2026 before rising to 2.7 per cent in 2027, representing an upward revision from the June forecast.

The resilience reflects better-than-expected growth, particularly in the United States, which accounts for about two-thirds of the upward revision to the 2026 outlook. Even so, if these forecasts hold, the 2020s are on track to be the weakest decade for global growth since the 1960s.

The report finds that the sluggish pace of growth is widening global living standards gaps. By the end of 2025, per capita income in nearly all advanced economies exceeded 2019 levels, while about one in four developing economies remained below those levels.

Global inflation is projected to decline to 2.6 per cent in 2026, reflecting softer labour markets and lower energy prices. Growth is expected to pick up in 2027 as trade flows adjust and policy uncertainty diminishes.

Indermit Gill, Chief Economist of the World Bank Group and Senior Vice President for Development Economics, commented: “With each passing year, the global economy has become less capable of generating growth and seemingly more resilient to policy uncertainty.”

Increasing debt

The Bank said that developing economies need to bolster fiscal sustainability, which has been eroded by overlapping shocks, rising development needs, and higher debt-servicing costs. A special-focus chapter of the report examines the use of fiscal rules to manage public finances.

Ayhan Kose, Deputy Chief Economist and Director of the World Bank’s Prospects Group, said: “With public debt in emerging and developing economies at its highest level in more than half a century, restoring fiscal credibility has become an urgent priority.”

Kose noted that well-designed fiscal rules can help stabilise debt, rebuild policy buffers, and improve resilience to shocks, but stressed that credibility, enforcement, and political commitment ultimately determine their success.