The UAE economy is expected to grow by 5% in 2026, rising to 5.1% in 2027, according to the World Bank’s latest Global Economic Prospects report.
The projection comes as the global economy shows more resilience than previously anticipated, despite ongoing trade tensions and policy uncertainty.
UAE and GCC growth
The report forecasts growth in Gulf Cooperation Council (GCC) states at 4.4% in 2026 and 4.6% in 2027. Across the broader Middle East and North Africa, Afghanistan, and Pakistan (MENAP) region, growth is expected to reach 3.6% next year, improving to 3.9% in 2027.
Global economy outlook
Global growth is projected to ease slightly to 2.6% in 2026 before rising to 2.7% in 2027, an upward revision from the World Bank’s June forecast. The stronger outlook is largely driven by better-than-expected growth in the United States, which accounts for about two-thirds of the revision.
Despite this resilience, the report warns that the 2020s are on track to be the weakest decade for global growth since the 1960s. The uneven pace of recovery is widening global living standards gaps. By the end of 2025, per capita income in nearly all advanced economies had surpassed 2019 levels, while around one in four developing economies remained below those levels.
Inflation and financial conditions
Global inflation is projected to fall to 2.6% in 2026, supported by softer labour markets and lower energy prices. Growth is expected to pick up in 2027 as trade flows adjust and policy uncertainty diminishes. Easing global financial conditions are expected to cushion the slowdown, even as trade and domestic demand soften.
Developing and low-income economies
Growth in developing economies is forecast to slow to 4% in 2026, up slightly to 4.1% in 2027, while low-income countries are expected to average 5.6% growth over the same period. The report notes that per capita income growth in developing economies is projected at 3% in 2026, below the 2000–2019 average, and will remain only a fraction of income levels in advanced economies.
The report highlights that these trends may intensify job-creation challenges, particularly in developing economies, where 1.2 billion young people are expected to enter the workforce over the next decade.
Policy priorities
To address these challenges, the World Bank recommends three main policy pillars: strengthening physical, digital, and human capital; improving the business environment to support investment; and mobilising private capital at scale. Fiscal sustainability is also highlighted as a critical concern, with high public debt in emerging and developing economies limiting policy flexibility.
“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,” said M. Ayhan Kose, Deputy Chief Economist and Director of the World Bank’s Prospects Group. He added that well-designed fiscal rules can stabilise debt, rebuild policy buffers, and improve resilience, but success depends on credibility, enforcement, and political commitment.
“With each passing year, the global economy has become less capable of generating growth and seemingly more resilient to policy uncertainty,” said Indermit Gill, Chief Economist of the World Bank Group and Senior Vice President for Development Economics.
tanvir@dubainewsweek.com
