UAE economy poised for ‘counterattack’ with 9.5% growth forecast in 2027

The United Arab Emirates (UAE) economy is expected to rebound by 9.5 percent in 2027, according to the World Bank, after contracting by 1.6 percent this year. This forecast marks a sharp recovery following the disruption caused by the conflict and the closure of the Strait of Hormuz. The World Bank projects the Gulf economy as a whole to contract by 4.3 percent in 2026 before rebounding by 10.3 percent in 2027, assuming disruptions ease from early next year.

Qatar and Kuwait are anticipated to experience even sharper rebounds of 26.7 percent and 22 percent, respectively, following contractions of 20.9 percent and 14.6 percent in 2026. The UAE is forecast to grow by 9.5 percent next year, while Saudi Arabia is expected to contract by 2 percent in 2026 and grow by 7.9 percent in 2027.

Bahrain is projected to contract by 2.9 percent this year before growing by 4.2 percent in 2027. Oman is the exception, with the World Bank forecasting growth of 3.1 percent in 2026 and 3.4 percent in 2027.

The UAE's growth rebound is seen as significant if the additional economic activity and investment are directed towards advanced manufacturing, logistics, AI, robotics, and productivity improvement. UAE Minister of Tourism and Economy Abdullah bin Touq Al Marri emphasized the importance of these sectors for the UAE's economic growth.

The World Bank's latest report highlights artificial intelligence (AI) as one of the region's long-term opportunities, despite the immediate outlook being dominated by conflict, energy, and trade disruptions. The UAE, ranked among the top 25 global countries for AI model development and high-performance computing, has the broadest occupational footprint of AI use in the MENAP region. However, the report also notes that less than 10 percent of jobs face near-term automation risk.