UAE Economy Forecast: IMF Projects 3.9% Contraction in 2026, 7.7% Rebound in 2027

The International Monetary Fund now expects the UAE economy to shrink by 3.9% in 2026 before growing 7.7% in 2027. According to The National, the new UAE economy forecast sits in the IMF’s World Economic Outlook, released in Washington on Tuesday, and it depends on shipping routes normalising and the Strait of Hormuz reopening.

Published: Tuesday, 13 October 2026

What the IMF now expects for the UAE

The fund describes the UAE as the Arab world’s second-largest economy. Compared with its April outlook, the 2026 figure is lower by 7 percentage points, while the 2027 figure is higher by 2.4 points, The National reports.

The Enterprise, which also covered the release, adds that Saudi Arabia faces a smaller contraction of 3.3% this year, followed by 7.9% growth in 2027. It links the downturn to the closure of the strait, which has curtailed exports and weighed on tourism and transport.

The Hormuz assumption behind the UAE economy forecast

The 7.7% rebound in the UAE economy forecast is not a free-standing prediction. The IMF’s baseline assumes a gradual reopening of the Strait of Hormuz from March 2027, with conditions returning to pre-war levels by October 2027. It also assumes uncertainty stays elevated through next year.

Across the wider Middle East and North Africa region, the fund expects a 2% contraction in 2026, a cut of 3.1 percentage points from April. Bahrain, Kuwait and Qatar face double-digit declines of 11.3%, 16.7% and 15.6%, and Oman is the only GCC member expected to grow this year, at 4.1%.

What the UAE economy forecast means for Dubai property buyers

The IMF figures describe the whole economy, not home prices. Still, the UAE economy forecast matters because property demand follows jobs, tourism and investor confidence.

In July, an IMF staff team that visited Abu Dhabi and Dubai said real estate activity moderated in the first half of 2026 after several years of strong expansion. According to Economy Middle East, the effect varied by segment and location, prices generally stayed at or above 2025 levels, and banks’ exposure to property remained contained.

For buyers, the practical step is to follow the Hormuz timeline and ask developers how their payment plans and handover dates would cope with a slower 2026. Our earlier reports on UAE financial markets and on Dubai’s more professional property market give more background, and our guide to buying property in Dubai explains the process step by step.

Frequently Asked Questions

What is the IMF’s UAE economy forecast for 2026 and 2027?

In its UAE economy forecast, the IMF projects the UAE economy will contract by 3.9% in 2026 and then grow by 7.7% in 2027. The rebound is conditional on shipping routes normalising and the Strait of Hormuz reopening, so the numbers could change if the timeline slips.

How does the UAE economy forecast compare with the IMF’s April outlook?

The 2026 projection is 7 percentage points lower than the April forecast, while the 2027 projection is 2.4 percentage points higher. The IMF also pushed back its assumed Hormuz reopening, which now begins gradually in March 2027 rather than earlier.

Does the UAE economy forecast include Dubai property prices?

The October outlook gives no property price forecast. In July, IMF staff said real estate activity had moderated in the first half of 2026 but prices generally remained at or above 2025 levels, and that banks’ exposure to the sector was contained.

Which Gulf economies face the deepest contractions?

Kuwait, Qatar and Bahrain face the steepest 2026 declines, at 16.7%, 15.6% and 11.3% respectively. Saudi Arabia is forecast to contract 3.3%, and Oman is the only GCC member expected to grow in 2026, by 4.1%.

Sources

• The National: IMF cuts 2026 growth forecasts for Gulf economies due to prolonged Hormuz closure (13 October 2026)
• The Enterprise: IMF slashes MENA growth as Hormuz closure disrupts oil and shipping (14 October 2026)
• Economy Middle East: UAE economic growth outlook remains resilient despite Hormuz disruptions, says IMF (20 July 2026)