The World Bank has forecasted a 5% growth for the UAE economy in 2026, with an anticipated increase to 5.1% in 2027, as outlined in the latest Global Economic Prospects report released today.
According to the report, growth in the Gulf Cooperation Council (GCC) countries is expected to reach 4.4% in 2026, rising to 4.6% in 2027.
The report also anticipates an increase in growth for the Middle East, North Africa, Afghanistan, and Pakistan, projecting a rate of 3.6% in 2026, which is expected to improve further to 3.9% in 2027.
The World Bank’s latest Global Economic Prospects report indicates that the global economy has demonstrated greater resilience than previously expected, despite ongoing trade tensions and policy uncertainties.
The report suggests that global growth will remain relatively stable over the next two years, decreasing to 2.6% in 2026 and then rising to 2.7% in 2027, marking an upward revision from previous forecasts in June.
This resilience is largely attributed to stronger-than-expected growth in the United States, which accounts for about two-thirds of the upward adjustment for 2026.
If these forecasts materialize, the 2020s are on track to be the weakest decade for global growth since the 1960s.
The report notes that the slowdown in growth is contributing to a widening gap in living standards globally; by the end of 2025, per capita income in most advanced economies will have surpassed 2019 levels, while around a quarter of developing economies will still be below those levels.
In 2025, global growth benefited from a surge in trade, which occurred prior to policy adjustments, coupled with a swift recalibration of global supply chains. However, this boost is expected to fade in 2026 due to a decline in trade and domestic demand.
The report forecasts a decrease in global inflation to 2.6% in 2026, driven by weaker labor markets and lower energy prices.
Growth is anticipated to improve in 2027 due to adjustments in trade flows and reduced policy uncertainty.
Indermit Gill, the World Bank’s Chief Economist and Senior Vice President for Development Economics, stated that “with each passing year, the global economy is becoming less capable of achieving growth while becoming more resilient to policy uncertainties.”
The report predicts a slowdown in growth for developing economies, with a projected rate of 4% in 2026, down from 4.2% in 2025, before nudging up slightly to 4.1% in 2027, aided by easing trade tensions, stabilized commodity prices, improved financial conditions, and increased investment flows.
Growth in low-income countries is expected to average 5.6% during 2026-2027, supported by strong domestic demand, recovering exports, and declining inflation rates. However, this growth will likely not suffice to narrow the income gap between developing and developed economies, with per capita income growth in developing economies expected to be around 3% in 2026, approximately one percentage point below the average from 2000-2019.
At this pace, per capita income in developing economies is projected to reach only 12% of that in advanced economies.
These trends may exacerbate the challenge of job creation in developing economies, particularly as 1.2 billion young individuals will enter the labor market over the next decade.
Addressing this challenge will require a comprehensive policy effort focused on three primary areas: enhancing physical, digital, and human capital to boost productivity and job opportunities; improving the business environment through credible policies and stable regulatory frameworks to enable company expansion; and attracting private investment broadly to support economic growth.
Aihan Kose, Deputy Chief Economist and Director of the World Bank’s Prospects Group, emphasized that with public debt in emerging and developing economies reaching its highest level in over 50 years, restoring fiscal credibility has become a top priority. Strong fiscal rules can assist governments in stabilizing debt levels and rebuilding the buffers that policy frameworks provide, enhancing their ability to respond more effectively to shocks. However, such rules alone are not sufficient; credibility, practical implementation, and political commitment are critical factors that ultimately determine whether fiscal rules will succeed or fail in achieving stability and growth.