A. SREENIVASA REDDY (ABU DHABI)
The UAE economy is projected to grow by 7.7% in 2027, rebounding from a projected contraction in 2026, according to the October 2026 edition of the International Monetary Fund's (IMF) World Economic Outlook (WEO), released in Bangkok on Tuesday.
The UAE economy grew by 6.2% in 2025, according to IMF estimates. The Fund also expects inflation in the country to rise to 4.5% in 2026 from 1.3% in 2025, before easing to 2.5% in 2027.
The Middle East and North Africa region is projected to grow by 7% in 2027 after contracting by 2% in 2026. The region recorded growth of 3.3% in 2025, according to IMF estimates.
The broader Middle East and Central Asia region is expected to contract by 0.3% in 2026 before expanding by 6.3% in 2027.
The IMF projected global economic growth of 3.1% in 2026 and 3.4% in 2027, compared with an estimated 3.5% in 2025. The forecast for 2026 remains unchanged from April, while the 2027 projection has been revised upwards by 0.2 percentage point.
The Fund said the global economy had performed better than expected.
“This resilience is reflected in our latest global growth forecast, which remains broadly unchanged from April, despite a more persistent energy market disruption than anticipated,” the IMF said in its report.
The Fund projected global headline inflation to increase to 4.7% in 2026 from 4.1% in 2025, before easing to 4.1% in 2027. Higher energy and food prices were identified as the main drivers of the temporary increase.
Among major economies, the United States is expected to grow by 2.3% in both 2026 and 2027, unchanged from its estimated growth rate in 2025.
China's economic growth is projected to moderate to 4.5% in 2026 and 4% in 2027, compared with 5% in 2025. India is expected to grow by 7% in both 2026 and 2027, following an estimated expansion of 7.8% in 2025.
The IMF said economic activity in the first half of 2026 had held up better than anticipated despite the continuing war in the Middle East and strains arising from international trade tensions.
Investment in artificial intelligence helped sustain demand, providing some support to economic activity amid geopolitical disruptions, the IMF said.
The IMF said adjustments in global oil supplies had significantly reduced the potential economic damage from the closure of the Strait of Hormuz.
According to its model-based estimates, the initial loss of oil supplies following the closure could have pushed average oil prices to approximately $110 a barrel in 2026, reducing global economic growth by 0.9 percentage point in the absence of supply adjustments.
However, alternative supply arrangements, including rerouted production in the Gulf, increased output elsewhere and the drawdown of inventories, helped cushion the impact.
The IMF estimated that these adjustments reduced the implied average oil price to about $85 a barrel for the year, limiting the estimated reduction in global growth to 0.4 percentage point, compared with 0.9 percentage point without such adjustments.