A. SREENIVASA REDDY (ABU DHABI)
The World Bank has projected the UAE economy to grow 9.5% in 2027, rebounding sharply from an expected contraction this year, while highlighting the country’s leadership in AI and high-performance computing as a bright spot in its longer-term growth outlook.
The World Bank, in its October report on economies of the Middle East, North Africa, Afghanistan and Pakistan (MENAAP) region, said GDP in the Gulf Cooperation Council (GCC) economies is projected to shrink by an average of 4.3% in 2026—with the UAE contracting by a more moderate 1.6%—before rebounding strongly in 2027.”
The UAE economy had expanded by an estimated 6.2% in 2025, the report said.
The Central Bank of the UAE (CBUAE), in its latest quarterly report, projected the UAE economy to grow 10.4% in 2027, following a more moderate 1.6% expansion in 2026, in contrast to the World Bank’s forecast of a contraction this year.
The UAE outlook is also supported by strong external and fiscal positions. The World Bank projects the country’s current account surplus at 8.2% of GDP in 2026, widening to 13.4% in 2027. Its fiscal surplus is projected at 4.2% of GDP this year and 5% in 2027, up from an estimated 3.7% in 2025.
The UAE therefore stands out within the GCC as one of the economies expected to maintain both current-account and fiscal surpluses through the period.
Inflation is also projected to remain relatively contained. The World Bank expects UAE inflation at 2.7% in 2026 before easing to 1.8% in 2027, compared with an estimated 1.3% in 2025.
The report said the economic impact of the regional conflict has been concentrated among Gulf hydrocarbon exporters because disruptions to the Strait of Hormuz curtailed production and export volumes.
However, the UAE, along with Oman and Saudi Arabia, was partly shielded by access to alternative export routes.
The World Bank expects the GCC economy to rebound strongly in 2027, with average growth projected at 10.3%, assuming the conflict subsides and production and shipping routes gradually normalise.
Qatar is projected to record the steepest contraction among GCC economies in 2026, at 20.9%, followed by Kuwait at 14.6%. Saudi Arabia is expected to contract by 2%, while Bahrain is projected to shrink by 2.9%. Oman is the only GCC economy expected to grow this year, with projected expansion of 3.1%.
In 2027, Qatar is projected to rebound by 26.7%, Kuwait by 22%, Saudi Arabia by 7.9%, Bahrain by 4.2% and Oman by 3.4%, alongside the UAE’s projected 9.5% expansion.
Beyond hydrocarbons, the World Bank highlighted the UAE as one of the region’s leading economies in artificial intelligence and digital infrastructure.
The UAE and Saudi Arabia are the only countries in MENAAP that rank among the global top 25 in both AI model development and high-performance computing capacity, positioning them as regional producers of AI technology rather than merely adopters.
The UAE has also risen sharply in Stanford University’s Global AI Vibrancy Index, climbing from 32nd place in 2017 to eighth in 2024. The index assesses national AI development across areas including research and development, investment, talent, infrastructure, governance, education and responsible AI.
The UAE also ranks among the region’s leaders in computing infrastructure. World Bank analysis of the TOP500 list placed the UAE and Saudi Arabia among the global top 25 in high-performance computing capacity, and they were the only MENAAP countries represented in the ranking both in absolute and per-capita terms.
The UAE is also among the region’s largest data-centre hosts. PeeringDB data cited by the World Bank showed the UAE accounted for about 15% of connected data centres in MENAAP as of June 2026.