The United Arab Emirates is expected to feel a comparatively mild impact from the slowdown in major global economies, thanks to its diversified trade links and reduced exposure to markets such as the United States, China and the European Union, the World Bank said in its latest regional outlook.
The report noted that several Middle East, North Africa, Afghanistan and Pakistan (MENAAP) economies remain vulnerable to weakening demand in advanced markets, particularly in Europe. Countries such as Tunisia and Morocco, which send more than half of their manufactured exports to the EU, are likely to face sharper consequences as European growth softens.
“Increased uncertainty about the growth rates of the world’s major economies — the US, the European Union, and China — as well as fluctuations in oil prices, are also likely to affect growth projections and other macroeconomic outcomes in the region,” the Bank said. “By contrast, the impact is smaller in the UAE, which, despite having substantial manufacturing exports, trades less with the US, China, and the EU and more with Asia – excluding China.”
The assessment comes as several major economies signal a slowdown. In the US, Federal Reserve officials have warned of potential recession risks tied to layoffs and declining consumer confidence. China’s economy is also showing signs of losing momentum.
Despite global uncertainty, the World Bank projects the UAE economy will grow by 4.8% in 2025 — nearly a full percentage point faster than in 2024 — supported by steady performance across financial services, construction, real estate and transport. Growth is expected to remain strong over the medium term as economic activity continues to broaden.
The outlook for the wider GCC has also strengthened. The World Bank raised its 2025 forecast for the region to 3.5%, up from 3.2% in April. While the figure is slightly below the 4.2% estimate published in October 2024, it still marks a sharp improvement from the 2.2% expansion recorded in 2024. The increase reflects a pickup in non-oil activity and rising oil output as Opec+ accelerates the rollback of its production cuts. All GCC economies are expected to expand more quickly next year.
The International Monetary Fund’s October projections align closely with the World Bank’s view. The IMF expects the UAE to grow 4.8% this year and 5% in 2026, unchanged from its earlier estimate.
The picture is markedly different for developing oil exporters outside the GCC. The World Bank said growth prospects for economies such as Algeria, Iran, Iraq and Libya have deteriorated sharply, with the group’s 2025 forecast cut to just 0.5%. That represents a drop from April’s estimate and a significant fall from the 2.5% growth recorded in 2024.
The report underscores the region’s widening divergence, with the UAE and its Gulf neighbours benefiting from economic reforms, diversified activity and rising output, while other oil-dependent economies face mounting pressure from global uncertainty and domestic structural challenges.
