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The World Bank reaffirmed the UAE’s growth forecast for this year at 5.0% revised upward its forecast for next year to 5.1%, according to the bank’s latest Global Economic Prospects report (pdf). This comes as the broader Middle East, North Africa, Afghanistan, and Pakistan region navigates a fragile recovery characterized by rising oil production and persistent geopolitical instability.
Remember the growth drivers: The UAE’s outlook is underpinned by its strong fiscal stance and massive sovereign wealth funds that provide substantial buffers against global shocks. While oil production is set to rise, non-hydrocarbon activity — now nearly 75% of the UAE’s GDP — is the real story. This expansion is being fueled by high-value sectors like AI, cybersecurity, and a data-center ecosystem that’s among the most advanced in the GCC.
The GCC at large
The GCC is poised to grow at a clip of 4.4% in 2026 and 4.6% in 2027 — well above projected global growth rates of 2.6% in 2026 and 2.7% in 2027. This acceleration is underpinned by a “steady expansion of non-hydrocarbon activity” and a strategic pivot as Opec+ begins to reverse production cuts.
The hydrocarbon rebound: After a larger-than-expected production increase in 2025, further Opec+ increases and expanding natural gas production — particularly in Qatar — will support the growth trajectory, according to the report.
Non-oil dynamism: Non-hydrocarbon activities now account for over 60% of total GCC GDP. This sector is being shored up by “expected large-scale investments” in infrastructure and technology, particularly in Kuwait and Saudi Arabia.
Fiscal deficits are expected to shrink across the GCC in 2026-27, courtesy of a boost to oil revenues — despite lower oil prices — as well as tax reforms, including in the UAE, the World Bank said.
Risks for the region are “tilted to the downside,” however, the World Bank says, pointing to regional conflicts, trade uncertainty, and lower oil prices as potentially harmful for demand, business confidence, and capital spending. Meanwhile, upside risks include further investments in AI and additional structural reforms across MENA.
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