Dubai, UAE — January 2026 — The World Bank’s latest Global Economic Prospects report projected steady but sluggish global growth, with the UAE economy expected to expand by 5 percent in 2026 and 5.1 percent in 2027.
The report indicated the global economy is proving more resilient than anticipated despite persistent trade tensions and policy uncertainty, as reported by the Emirates News Agency.
Global growth is forecast to ease to 2.6 percent in 2026 before a modest rise to 2.7 percent in 2027, an upward revision from earlier forecasts. This resilience is largely attributed to stronger-than-expected growth in the United States. Nevertheless, the 2020s remain on track to be the weakest decade for global growth since the 1960s.
The sluggish pace is widening global living standards gaps. By the end of 2025, per capita income in nearly all advanced economies exceeded 2019 levels, while approximately one in four developing economies remained below those levels.
Regionally, growth in Gulf Cooperation Council states is projected to rise to 4.4 percent in 2026 and 4.6 percent in 2027. For the broader Middle East and North Africa, Afghanistan, and Pakistan region, growth is expected to reach 3.6 percent in 2026, improving to 3.9 percent in 2027.
Global inflation is projected to decline to 2.6 percent in 2026, reflecting softer labour markets and lower energy prices. Growth is expected to pick up in 2027 as trade flows adjust and policy uncertainty diminishes.
“With each passing year, the global economy has become less capable of generating growth and seemingly more resilient to policy uncertainty,” said Indermit Gill, chief economist of the World Bank Group.
Growth in developing economies is expected to slow to 4 percent in 2026 before edging up to 4.1 percent in 2027. Low-income countries are projected to see higher average growth of 5.6 percent over 2026–2027, supported by firming domestic demand and recovering exports.
However, this pace will not narrow the income gap with advanced economies. At the current trajectory, per capita income in developing economies is expected to reach only 12 percent of the level in advanced economies.
These trends intensify the job-creation challenge for developing economies, where 1.2 billion young people are expected to reach working age over the next decade.
The report called for a comprehensive policy effort focused on strengthening capital, improving the business environment, and mobilizing private investment.
“Restoring fiscal credibility has become an urgent priority,” said M. Ayhan Kose, deputy chief economist at the World Bank, highlighting that well-designed fiscal rules can help stabilize debt if backed by credible enforcement and political commitment.
