UAE Economy Growth Forecast: 5% In 2026 And 5.1% In 2027, World Bank Reports

The World Bank expects the UAE economy to expand by 5% in 2026 and 5.1% in 2027, outpacing global growth that remains subdued. The latest Global Economic Prospects report also highlights stronger forecasts for Gulf Cooperation Council states, even as it warns that the 2020s may register as the weakest decade for global growth since the 1960s.

According to the report, GCC economies are projected to grow by 4.4% in 2026 and 4.6% in 2027, with the UAE among the faster performers. Growth in the broader Middle East and North Africa, Afghanistan and Pakistan region is expected to reach 3.6% in 2026, rising to 3.9% in 2027, supported by trade and investment trends.

The World Bank notes that the global economy is showing more resilience than earlier assumed, despite ongoing trade tensions and policy uncertainty. Global growth is expected to ease to 2.6% in 2026 and then edge up to 2.7% in 2027, which is an upward revision from the June forecast, driven largely by stronger performance in major advanced economies.

Stronger-than-anticipated growth in the United States accounts for about two-thirds of the upward adjustment to the 2026 global outlook. However, the World Bank warns that even with these improvements, global performance this decade is on track to be historically weak, raising questions about long-term income prospects in many regions and sectors.

In 2025, global output received a short-term boost from front-loaded trade activity ahead of policy shifts and from rapid changes in supply chains. These temporary supports are expected to fade in 2026 as international trade and domestic consumption cool. Softer global financial conditions, however, should help cushion the slowdown and support a modest pickup in 2027.

Global inflation is projected to fall to 2.6% in 2026, helped by weaker labour markets and lower energy prices. "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.

The World Bank expects growth in developing economies to slow from 4.2% in 2025 to 4% in 2026, before improving slightly to 4.1% in 2027. The modest upturn rests on easing trade tensions, steadier commodity prices, better financial conditions and stronger investment flows, although many countries still face structural constraints and limited fiscal space.

Growth in low-income countries is forecast to average 5.6% over 2026–2027, supported by stronger domestic demand, recovering export volumes and moderating inflation. Yet this pace is not enough to close income gaps with advanced economies. Per capita income growth in developing economies is projected at 3% in 2026, roughly one percentage point below its 2000–2019 average.

World Bank global economy outlook, income gaps and policy priorities

The World Bank estimates that by the end of 2025, per capita income in nearly all advanced economies exceeded 2019 levels. In contrast, around one in four developing economies remained below those pre-pandemic benchmarks. At the current trajectory, per capita income in developing economies is expected to reach only 12% of the level seen in advanced economies.

These trends increase pressure on labour markets in developing economies, where 1.2 billion young people are expected to enter working age over the next decade. The report states that meeting the related jobs challenge requires a three-part policy agenda: improving physical, digital and human capital; strengthening the business climate; and mobilising large-scale private investment.

Developing economies also need to strengthen fiscal sustainability, which has been weakened by repeated shocks, rising development demands and higher debt-servicing costs. A dedicated chapter assesses how fiscal rules can guide public finance management. "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.

Kose noted that well-designed fiscal rules can stabilise debt, rebuild policy buffers and improve resilience to shocks, but emphasised that outcomes depend on credibility, enforcement and political commitment. For Middle East economies, including the UAE and its neighbours, the World Bank’s projections underline both the region’s relative growth strength and the importance of maintaining prudent fiscal and structural policies.

With inputs from WAM