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UAE: GDP to rise by 5% next year, become second-fastest growing GCC economy, IMF says
Inflation in the UAE is likely to stay steady at around 2.1 per cent this year and 2 per cent next year
- PUBLISHED: Tue 22 Apr 2025, 5:06 PM
The International Monetary Fund (IMF) on Tuesday projected higher growth for the UAE economy for 2026 at 5 per cent compared to 4 per cent for this year.
The Fund's World Economic Outlook, published on Tuesday, said that UAE GDP grew 3.8 per cent last year.
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The UAE will be the fastest-growing economy among the Gulf Cooperation Council (GCC) countries this year and second fastest in 2026. With 5.6 per cent growth projected for next year, Qatar will be the fastest-growing economy.
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Gulf countries' growth (%) (Source: IMF)
| Country | 2024 | 2025 | 2026 |
|---|---|---|---|
| UAE | 3.8 | 4 | 5 |
| Saudi Arabia | 1.3 | 3 | 3.7 |
| Qatar | 2.4 | 2.4 | 5.6 |
| Kuwait | -2.8 | 1.9 | 3.1 |
| Oman | 1.7 | 2.3 | 3.6 |
| Bahrain | 2.8 | 2.8 | 3 |
According to IMF’s World Economic Outlook, the UAE economy will grow faster than overall oil exporters’ economy which is likely to expand 2.6 per cent and 3.1 per cent in 2025 and 2026, respectively.
Inflation in the UAE is likely to stay steady at around 2.1 per cent this year and 2.0 per cent next year.
The UAE is expected to maintain a healthy current account balance, reaching 6.6 per cent in 2025 and 6.4 per cent in 2026, according to IMF.
For the Middle East and North Africa, the Fund forecasted 2.6 per cent and 3.4 per cent for this year and next, respectively. While the Middle East and Central Asia region will grow by 3 per cent and 3.5 per cent.
“The Middle East and Central Asia is projected to come out of several years of subdued growth… as the effects of disruptions to oil production and shipping dissipate and the impact of ongoing conflicts lessens. Compared with that in January, the projection is revised downward, reflecting a more gradual resumption of oil production, persistent spillovers from conflicts, and slower-than-expected progress on structural reforms,” it said.
Impact of tariff crisis
IMF said that major policy shifts are resetting the global trade system and giving rise to uncertainty that is once again testing the resilience of the global economy.
Economists say that the US-led tariffs are impacting global economic and trade growth as other countries also impose tariffs in tit-for-tat tax war.
As a result of tariff uncertainty and geopolitical situations around the world, IMF lowered global economic growth by 0.5 per cent and 0.3 per cent to 2.8 per cent in 2025 and 3 per cent for 2026, respectively.
For the US, growth is projected to decrease in 2025 to 1.8 per cent, 1 per cent lower than 2024 as well as 0.9 per cent lower than the forecast rate in the January 2025 WEO Update.
“The downward revision is a result of greater policy uncertainty, trade tensions, and a softer demand outlook, given slower-than-anticipated consumption growth. Tariffs are also expected to weigh on growth in 2026, which is projected at 1.7 per cent amid moderate private consumption,” IMF said.
Similarly, China's growth was lowered to 4 per cent for 2025 and 2026. India was also not immune to global challenges as its growth is likely to slow down to 6.2 per cent and 6.3 per cent in 2025 and 2026, respectively.
The Fund slashed its forecast for global growth this year, citing the impact of US President Donald Trump's new tariff policies on the world economy.
