World Bank: UAE economy to grow by 5% in 2026 and 5.1% in 2027

World Bank.. UAE Economy to Grow 5% in 2026 and 5.1% in 2027

The World Bank expects the UAE economy to grow by 5% this year, 2026, and to rise to 5.1% in 2027, according to its Global Economic Prospects report released Tuesday.

The report also forecasts that growth in the Gulf Cooperation Council (GCC) countries will reach 4.4% in 2026 and 4.6% in 2027. The report anticipates that growth in the Middle East, North Africa, Afghanistan, and Pakistan will reach 3.6% in 2026 and continue to improve, reaching 3.9% in 2027.

The World Bank stated in its latest Global Economic Prospects report that the global economy has proven more resilient than expected, despite ongoing trade tensions and policy uncertainty. The report indicated that global growth will remain relatively flat over the next two years, declining to 2.6 percent in 2026 before rising to 2.7 percent in 2027—an upward revision from the June forecast.

This resilience reflects better-than-expected growth, particularly in the United States, which accounts for roughly two-thirds of the upward revision in the 2026 forecast. According to the report, if these projections materialize, the 2020s are on track to be the weakest decade for global growth since the 1960s.

The report emphasizes that the slowdown in growth is widening the gap in living standards globally. By the end of 2025, per capita income in most advanced economies will have exceeded 2019 levels, while roughly a quarter of developing economies will remain below them.

In 2025, global growth benefited from a trade boom that preceded policy changes, coupled with a rapid readjustment of global supply chains. This boost is expected to fade in 2026 due to a decline in trade and domestic demand.

According to the report, global inflation is projected to fall to 2.6 percent in 2026, reflecting weaker labor markets and lower energy prices. Growth is expected to improve in 2027 as trade flows adjust and policy uncertainty recedes.

“With each passing year, the global economy has become less capable of growing and more resilient to policy uncertainty,” said Endermet Gill, World Bank Group Chief Economist and Senior Vice President for Development Economics.

The report projected that growth in developing economies would slow to 4 percent in 2026, compared to 4.2 percent in 2025, before rising slightly to 4.1 percent in 2027 as trade tensions ease, commodity prices stabilize, financial conditions improve, and investment flows strengthen.

These trends could exacerbate the challenge of job creation in developing economies, where 1.2 billion young people will reach working age in the next decade.

Overcoming this challenge will require a comprehensive policy effort based on three main pillars: first, strengthening physical, digital, and human capital to increase productivity and improve employment opportunities; second, improving the business environment by enhancing policy credibility and ensuring a stable regulatory environment that allows companies to expand; and third, attracting large-scale private capital to support investment.

Ayhan Kose, Deputy Chief Economist and Director of the Development Prospects Group at the World Bank, stated that with public debt in emerging and developing economies reaching its highest level in more than half a century, restoring fiscal credibility has become a top priority. 

Sound fiscal rules can help governments stabilize debt levels, rebuild policy buffers, and enhance their ability to respond more effectively to shocks. However, rules alone are not enough; Credibility, actual implementation, and political commitment are the critical factors that ultimately determine whether fiscal rules will succeed or fail in achieving stability and growth.