The Mastercard Economics Institute has released its annual report titled “Economic Outlook 2026,” highlighting key economic topics expected to shape the landscape in the coming year.
According to the report, the GDP of the UAE is projected to increase by 4.3%. It notes that small and medium-sized enterprises account for over 37% of retail spending in the country. Additionally, e-commerce spending is expected to grow annually, providing these businesses with a chance to expand their share in technology-driven services due to the rising demand for local tech solutions and specialized offerings, which enhances their competitiveness in traditionally dominated sectors by larger companies.
The report emphasizes that economic policies making headlines in 2025 will continue to influence global economies throughout 2026. It also points out that the adoption of artificial intelligence presents significant opportunities. The global GDP is forecasted to grow at a moderate rate of 3.1% in 2026, with a projected rise of 3.6% in the Middle East and North Africa on a year-on-year basis, exhibiting varied growth rates among the region’s countries. The report indicates that the UAE’s GDP will grow by 4.3%, while Saudi Arabia is expected to achieve a growth of 3.6%, with non-oil GDP likely to be stronger, nearing 5% in both nations. Qatar is projected to experience the highest growth at 4.9%, driven by an increase in liquefied natural gas production, followed by Egypt at 4.4%. The economy of Pakistan is anticipated to grow by 3.6% in the approaching year.
The report also highlights other Gulf Cooperation Council (GCC) markets expected to show growth rates in 2026, including Oman (3.3%), Bahrain (3.1%), and Kuwait (2.5%). Government investments and robust consumer spending will underpin economic activity throughout the region.
Inflation Rates
The report predicts that inflation rates will remain stable at around 2% in GCC countries, dropping to an average of 6.7% in oil-importing economies. These declines, buoyed by a weakened U.S. dollar and lower energy prices, may allow central banks to reduce interest rates, thus alleviating cost-of-living pressures.
Khadija Haq, the chief economist for Eastern Europe, the Middle East, and Africa at the Mastercard Economics Institute, stated, “The economic outlook for the Middle East and North Africa appears generally positive for 2026, partially supported by ongoing structural reforms. Improved financial conditions in oil-exporting countries are expected to stimulate non-oil sectors, alongside decreased interest rates in tandem with U.S. rate cuts. Consumers are likely to benefit from lower borrowing costs and controlled inflation, boosting demand in key sectors like real estate, tourism, and retail. However, there are risks that could impact these forecasts, including geopolitical tensions and climate-related challenges that may affect investments and economic activity.”
Significant Resources
The report notes that GCC countries will invest substantial resources in renewable energy, construction, and technology, which will reshape global supply chains and capital flows. According to long-term national insights, these investments are expected to support non-oil growth, enhance economic diversification, create job opportunities, and attract talent to the region.
Furthermore, the report anticipates a gradual shift in trade within the Middle East and North Africa away from advanced economies toward other countries in the Europe, Middle East, and Africa region, as well as emerging markets over the past two decades. It predicts that digital transformation, particularly through deep integration of artificial intelligence, will bolster productivity and growth.
The “Economic Outlook 2026” report relies on a wide range of public and private data, including aggregated and privacy-preserving Mastercard data, as well as economic activity estimation models.