Today's Edition
A. SREENIVASA REDDY (ABU DHABI)
The World Bank’s latest report on the global economy has upgraded the growth outlook for the UAE. The real GDP growth forecast for the UAE has been revised upwards to 4.6% in 2025, 4.9% in 2026, and 4.9% in 2027.
This represents an increase of 0.6 percentage points for 2025 and 0.8 percentage points for 2026 compared to the January 2025 projections.
This positive revision for the UAE comes amid a more subdued global economic backdrop. The World Bank has lowered its global growth forecast for 2025 by nearly half a percentage point to 2.3%, citing heightened trade tensions and policy uncertainty as major headwinds affecting almost all economies.
Growth projections have been downgraded for close to 70% of economies across all regions and income groups.
For the Gulf Cooperation Council (GCC) bloc as a whole, the World Bank forecasts growth of 3.2% for 2025, 4.5% for 2026, and 4.8% for 2027. However, these latest estimates are lower than those issued in January, primarily due to the impact of increased trade restrictions and related uncertainty on investment and export activity.
“The phase-out of oil production cuts is expected to lead to rising oil production, despite projected lower oil prices amid weakening global demand,” the World Bank report said.
Expanding non-oil activity is also expected to continue boosting growth in the region, the report added.
The World Bank highlights that global growth is projected to slow to its weakest pace since 2008. While a global recession is not anticipated, if current forecasts hold, the average global growth rate for the first seven years of the 2020s will be the slowest for any decade since the 1960s.
“Outside of Asia, the developing world is becoming a development-free zone,” said Indermit Gill, the World Bank Group’s Chief Economist and Senior Vice President for Development Economics. “It has been advertising itself for more than a decade. Growth in developing economies has ratcheted down for three decades—from 6% annually in the 2000s to 5% in the 2010s—to less than 4% in the 2020s.”
Growth is expected to decelerate in nearly 60% of all developing economies this year, averaging 3.8% in 2025 before inching up to 3.9% in 2026 and 2027. This remains more than a full percentage point below the average of the 2010s.
The report warns that this deceleration will hinder the ability of developing economies to create jobs, alleviate extreme poverty, and narrow income gaps with advanced economies.
In the Middle East and North Africa (MENA) region — where the UAE is a major economic player — activity has strengthened despite global trade tensions. In oil-exporting countries, oil activity is recovering following the announced phase-out of voluntary production cuts. Non-oil growth has also remained resilient.
Overall, growth in the MENA region is projected to accelerate to 2.7% in 2025, 3.7% in 2026, and 4.1% in 2027. This anticipated recovery reflects a gradual expansion in oil production that is expected to more than compensate for the effect of lower oil prices.
The World Bank report suggests that global growth could rebound more quickly if leading economies manage to reduce trade tensions, thereby easing policy uncertainty and financial volatility. It estimates that resolving current trade disputes and halving tariffs could result in global growth being 0.2 percentage points stronger on average across 2025 and 2026.
“Emerging-market and developing economies reaped the rewards of trade integration but now find themselves on the frontlines of a global trade conflict,” said M. Ayhan Kose, the World Bank’s Deputy Chief Economist and Director of the Prospects Group.
“The smartest way to respond is to redouble efforts on integration with new partners, advance pro-growth reforms, and shore up fiscal resilience to weather the storm.”
