IMF forecasts UAE economic growth of 7.7% in 2027

Dubai: The International Monetary Fund (IMF) has projected that the UAE economy will grow by 7.7% in 2027, an increase of 2.4 percentage points compared to its forecasts issued last April, highlighting the country’s substantial financial buffers, advanced infrastructure, and economic and technological capabilities that strengthen its readiness to seize future growth opportunities and address regional and global challenges. The announcement came during a press conference organised by the Dubai International Financial Centre (DIFC), in cooperation with the IMF, under the theme "Resilience in the Face of Challenges: Diverging Economic Outlooks in the Middle East and North Africa.” During the conference, Dr. Jihad Azour, Director of the IMF’s Middle East and Central Asia Department, presented the key findings of the October 2026 Regional Economic Outlook for the Middle East and Central Asia. The press conference was followed by a panel discussion featuring policymakers, economists, and private-sector leaders. The report highlighted the UAE’s substantial financial buffers, which provide flexibility to use fiscal policies to support economic activity when needed, within a credible medium-term framework that preserves fiscal sustainability. It also emphasised the importance of investment in infrastructure development, strengthening supply-chain efficiency, and supporting business continuity. Dr. Azour said that the region’s economies have demonstrated resilience in dealing with economic crises, benefiting from the experience and policies developed over recent years, including measures implemented during the COVID-19 pandemic, which helped maintain economic activity, support affected sectors, and accelerate recovery. He explained that the UAE is among the countries best positioned to benefit from rapid developments in artificial intelligence, thanks to its previous investments, advanced infrastructure, and technological capabilities. He noted that continued investment in AI could add approximately 0.5 percentage points to the UAE’s annual economic growth. The report also indicated that AI adoption could increase annual economic growth across the Middle East and Central Asia by between 0.1 and 0.6 percentage points over the medium term, with gains varying according to countries’ readiness and their ability to deploy advanced technologies. It emphasised the importance of continued investment in digital infrastructure, human capital development, skills training, and innovation ecosystems, alongside the development of exportable AI-based services for global markets, helping improve productivity and diversify sources of growth. Regarding inflation, the report projected that average inflation across the Gulf Cooperation Council (GCC) countries would decline to 2.4% in 2027 and reach approximately 2% from 2028 onwards, supported by falling commodity prices and continued fiscal discipline. The report further stressed that export and market diversification, the development of alternative trade corridors, and stronger economic integration are key factors in enhancing the region’s resilience to external shocks. It highlighted the importance of developing transport and logistics infrastructure and strengthening trade connectivity among countries. The IMF also emphasised that investment in education, skills development, and labour market flexibility can boost productivity and support economic diversification, alongside continued structural reforms, improvements to the investment environment, and a stronger role for the private sector. The report noted that the IMF has approved approximately US$48 billion in financing for countries in the Middle East and Central Asia since 2020 and implemented 437 technical assistance and capacity development projects across 31 countries during fiscal year 2026, as part of its efforts to support economic stability and sustainable development. It concluded that leveraging global technological transformations, strengthening trade integration, and diversifying economic activities would create new opportunities for countries across the region to increase productivity, expand investment, and establish stronger foundations for sustainable growth in the years ahead.