The UAE’s economy is expected to surpass the global growth average this year, showing resilience amid ongoing global economic uncertainties, the International Monetary Fund (IMF) said last week following its Article IV consultation with the Emirates.

The IMF forecasts the country’s GDP to grow by 4.8% this year, supported by robust non-hydrocarbon sector growth and higher OPEC production, with further expansion projected at 5% in 2026.

The IMF’s growth forecast is slightly lower than the UAE Central Bank’s projection of 4.9% for this year, which was released last week.

Last month, the UAE unveiled a new strategy to strengthen its economy with an annual investment of Dh30 billion ($8.16 billion). Known as the National Policy for Economy Clusters, the plan aims to increase foreign trade by Dh15 billion over the next seven years.

The initiative builds on Comprehensive Economic Partnership Agreements (CEPAs) the UAE has signed to enhance trade ties with countries such as Jordan, New Zealand, and Angola, The National reports.

The CEPAs the UAE signed with Australia and Malaysia came into effect last Wednesday.

“Ongoing efforts to expand Comprehensive Economic Partnership Agreements will further bolster resilience and support diversification, while financial markets and capital flows continue to demonstrate resilience to global shocks, reflecting strong investor confidence,” stated Said Bakhache, the IMF mission chief to the UAE.

The UAE’s inflation is forecast at 1.6% for this year and around 2% over the medium term. However, the IMF noted that housing costs are expected to remain the main driver of price pressures, raising concerns about affordability.

The fund also highlighted that the UAE’s financial sector remains robust, with banks continuing to be profitable.

Data from the UAE Central Bank showed that bank deposits grew by over 13% year-on-year in the second quarter, while lending rose by 11%.

In addition, the IMF also welcomed the UAE’s improvements to its Dirham Monetary Framework, noting that they are aiding in more effective liquidity management.

The IMF’s staff mission comes as the UAE continues its drive to diversify beyond oil. As part of this strategy, the Emirates is positioning itself as a global hub for artificial intelligence, promoting the growth of start-ups and attracting investments and partnerships from industry leaders such as Microsoft, Nvidia, and OpenAI.

“The UAE’s rapid emergence as a global AI hub offers significant opportunities,” Bakhache added.