MENA Region Set To Outpace Global Growth In 2026 On Back Of Investment And AI Adoption

The robust performance will be underpinned by substantial public sector investment and resilient consumer spending, with non-oil growth expected to reach close to five per cent in both the UAE and Saudi Arabia as economic diversification efforts gain traction.

Qatar is forecast to lead the region with 4.9 per cent growth driven by increased liquefied natural gas production, followed by Egypt at 4.4 per cent. The UAE and Saudi Arabia are expected to post GDP growth of 4.3 per cent and 3.6 per cent respectively, whilst Pakistan is also projected to expand by 3.6 per cent.

Other GCC markets are anticipated to grow more modestly, with Oman at 3.3 per cent, Bahrain at 3.1 per cent and Kuwait at 2.5 per cent.

Inflation is expected to remain stable at around 2 per cent across the Gulf states, whilst oil-importing economies should see price pressures ease to an average of 6.7 per cent. The disinflation trend, supported by a weaker US dollar and lower energy costs, may enable central banks to reduce interest rates and alleviate cost-of-living pressures for consumers.

Chief economist for EEMEA at the Mastercard Economics Institute Khatija Haque said: “Looking ahead to 2026, the economic forecast for the MENA region appears broadly favourable, driven in part by ongoing structural reforms. For oil-exporting countries, easing financial conditions will likely stimulate non-oil sectors, as interest rates decrease alongside rate cuts in the US.

“Reduced borrowing costs and controlled inflation are expected to benefit consumers, spurring demand across key sectors such as real estate, tourism and retail.

“There are risks to the outlook however, including geopolitical tensions and climate-related challenges, which may disrupt investment and economic activity.”

The institute identifies several key factors shaping the region’s economic trajectory. Gulf states are channelling substantial resources into renewable energy, construction and technology in line with long-term national strategies such as Saudi Arabia’s Vision 2030 and the UAE’s National Strategy for Artificial Intelligence 2031.

These investments are expected to reshape global supply chains whilst advancing economic diversification and job creation.

Trade patterns are also shifting, with MENA countries gradually pivoting away from advanced economies towards other emerging markets within the Eastern Europe, Middle East and Africa region over the past two decades, despite ongoing threats from higher tariffs and geopolitical tensions.

Digital transformation is emerging as a critical growth driver, with deeper artificial intelligence integration anticipated to boost productivity across the region.

Small and medium-sized enterprises are increasingly adopting digital tools to streamline operations and compete more effectively, with UAE SMEs accounting for just over 37 per cent of retail spending and showing year-on-year growth in their share of e-commerce activity.

The institute notes that consumers across the region will continue to prioritise meaningful experiences such as travel and live events whilst remaining price-sensitive for everyday goods, maintaining a tech-enabled and value-conscious approach to spending.