On Tuesday, the International Monetary Fund (IMF) revised its growth forecast for the UAE economy, predicting an increase to 5 percent in 2026, a rise from the 4 percent expected for this year.
The organization’s World Economic Outlook, released on Tuesday, indicated that the GDP of the UAE expanded by 3.8 percent last year.
In 2023, the UAE is anticipated to be the fastest-growing economy within the Gulf Cooperation Council (GCC), and second fastest in 2026. Meanwhile, Qatar is projected to lead the growth race with an estimated 5.6 percent increase next year.
Projected Growth Rates for Gulf Nations (%) (Source: IMF)
| 2024 | 2025 | 2026 | Country |
|---|---|---|---|
| 3.8 | 4 | 5 | UAE |
| 1.3 | 3 | 3.7 | Saudi Arabia |
| 2.4 | 2.4 | 5.6 | Qatar |
| -2.8 | 1.9 | 3.1 | Kuwait |
| 1.7 | 2.3 | 3.6 | Oman |
| 2.8 | 2.8 | 3 | Bahrain |
The IMF’s World Economic Outlook forecast suggests that the growth of the UAE will surpass that of other oil-exporting nations, which are expected to see expansions of 2.6 percent in 2025 and 3.1 percent in 2026.
Inflation in the UAE is projected to remain stable at about 2.1 percent this year and drop slightly to 2.0 percent the following year.
The UAE is likely to sustain a robust current account surplus, which is anticipated to be 6.6 percent in 2025 and 6.4 percent in 2026, as per IMF estimates.
For the broader Middle East and North Africa region, the IMF forecasts growth rates of 2.6 percent for this year and 3.4 percent for the next. The Middle East and Central Asia are expected to grow by 3 percent and 3.5 percent, respectively.
The IMF noted that the Middle East and Central Asia are on track to recover from several years of sluggish growth, partly due to the easing effects of disruptions in oil production and shipping, as well as a reduction in the impact of ongoing conflicts. However, compared to January’s estimates, projections have been adjusted downward due to slower-than-expected recovery in oil production, ongoing conflict spillovers, and delayed structural reforms.
Effects of Tariff Uncertainty
The IMF indicated that significant policy changes are reshaping the global trade landscape, introducing uncertainties that are testing the resilience of the world economy.
Economists warn that tariffs imposed by the US are influencing global economic and trade activities as other nations retaliate with their own tariffs.
Due to the uncertainties surrounding tariffs and ongoing geopolitical challenges, the IMF has reduced its global economic growth forecasts by 0.5 percent and 0.3 percent, projecting growth rates of 2.8 percent in 2025 and 3 percent in 2026.
For the United States, growth is expected to decline to 1.8 percent in 2025, marking a drop of 1 percentage point from 2024 and 0.9 percentage points lower than earlier forecasts for January 2025.
The downward adjustment reflects increased policy uncertainties, heightened trade tensions, and a weaker demand outlook, stemming from slower-than-anticipated consumption growth. Tariff impacts are expected to further hinder growth in 2026, which is projected to be at 1.7 percent amidst moderate private consumption.
Likewise, growth forecasts for China have been lowered to 4 percent for both 2025 and 2026. India is also facing similar global economic challenges, with projected growth rates of 6.2 percent and 6.3 percent for 2025 and 2026, respectively.
The IMF has since reduced its global growth forecast for this year, attributing the change to the repercussions of new tariff policies initiated by the United States.