Blitz Bureau
NEW DELHI: The UAE and other GCC economies are expected to recover over the next two years following slower growth in 2026, the World Bank said. The slowdown is linked to the Middle East war and the closure of the Strait of Hormuz.
According to World Bank projections, UAE real GDP growth will ease to 2.4 per cent in 2026 as the conflict weighs on global growth. Growth is then forecast to pick up to 4.1per cent in 2027 and 4.2 per cent in 2028. Data showed that the World Bank revised down the Gulf country’s growth by 2.6 per cent and 1.0 per cent for 2026 and 2027, respectively. “The conflict has taken a toll on global activity, but every crisis also brings an opportunity,” said Ayhan Kose, the World Bank Group’s Deputy Chief Economist and Director of the Prospects Group.
“This moment should be used to strengthen policy frameworks, invest in infrastructure, accelerate business-enabling reforms, and mobilise private capital to support job creation at scale,” he said in the World Bank’s Global Economic Prospects report. In April 2026, the International Monetary Fund (IMF) projected that the UAE economy will grow by 3.1 per cent this year and 5.3 per cent in 2027, as the country’s economy will be less impacted than other countries in the Gulf region.
“The contraction in GDP growth for 2026 is therefore more pronounced for Bahrain, Iran, Iraq, Kuwait, and Qatar, and less significant for Oman, Saudi Arabia, and the UAE. For all these economies, growth in 2027 is expected to rebound, based on the assumption that energy production and transportation will normalise over the next few months,” the IMF said in its latest World Economic Outlook report.
The UAE and other Gulf nations enjoy strong sovereign ratings on the back of huge sovereign wealth fund assets, reaching trillions of dollars. In addition, alternative pipelines bypassing the Strait of Hormuz are also a credit positive for the country. “Most GCC sovereign ratings are resilient to the war’s effects due to very strong sovereign balance sheets backed by alternative export channels (Oman, Saudi Arabia and UAE/Abu Dhabi) or prospects of additional support (Bahrain),” according to Fitch Ratings.
The World Bank’s Global Economic Prospects report also projected slower growth for the other Gulf countries this year, but stronger growth in 2027 and 2028.
