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The World Bank raised its GDP growth forecast for the UAE to 4.6% in 2025 and 4.9% in 2026 in its April Mena Economic Update (pdf). The bank had previously forecast 4.0% growth for the UAE in 2025 and 4.1% for 2026.
The rationale: The upgrade reflects stronger non-oil momentum and a gradual unwinding of Opec+ oil output cuts, which are expected to boost hydrocarbon activity across the region.
REFRESHER- Opec+ is moving ahead with its planned supply hikes, citing a positive market outlook, but has left room to pause or reverse course if needed. The UAE is set to benefit from a raised production quota of 3.5 mn barrels per day in 2025, up from 2.9 mn.
Manufacturing muscle: The UAE’s industrial sector — a key pillar of its diversification strategy — is expected to remain a strong growth driver, the World Bank notes. Alongside Bahrain and Oman, the UAE exports manufactured goods worth more than 20% of GDP despite being a major oil producer. The country also ranks among the region’s leading manufacturing exporters, with a diversified profile of exports accounting for almost 30% of GDP in 2022.
A Reuters poll of economists was slightly less optimistic, forecasting 4.5% growth for the UAE — a downward revision from 5% earlier in January, though still the fastest in the region.
REMEMBER- Earlier this week, the International Monetary Fund (IMF) maintained its UAE forecast at 4% for 2025 — also the highest forecast across the GCC — noting resilient non-oil momentum and a projected 4.5% expansion in non-hydrocarbon GDP. The UAE Central Bank expects a stronger 4.7% GDP growth, while S&P Global and Fitch Solutions’ research unit BMI had previously forecast 5.1% growth this year.
THE REGIONAL PICTURE-
The broader MENA region is forecast to expand 2.6% in 2025 and 3.7% in 2026, marking sharper downgrades from earlier forecasts of 3.4% and 4.1%. The downward revisions reflect tighter global financial conditions, as well as a projected fall in remittances, and a worsening of external balances amid capital outflows on the back of dampened consumer confidence and investor sentiment leading to capital outflows.
GCC economies will fare better: The GCC as a whole is now projected to grow 3.2% in 2025 and 4.5% in 2026, with both 2025 and 2026 figures revised down by just 0.1 percentage points from the World Bank’s January estimates. Gulf economies are expected to outperform thanks to resilient non-oil sectors such as tourism, construction, and financial services.
