The UAE economy is projected to outperform the global average this year as it is expected to remain resilient to uncertainty in the global economy, the International Monetary Fund (IMF) said on Thursday at the conclusion of its Article IV consultation with the Emirates.
The IMF projects the UAE's gross domestic product (GDP) to expand at a 4.8 per cent pace this year, driven by strong non-hydrocarbon growth and Opec production increases before expanding at a further 5 per cent rate in 2026.
The fund's growth projection is slightly below the UAE Central Bank's forecast for this year – which was released last week – of 4.9 per cent.
The UAE last month announced the launch of a strategy to boost its economy by Dh30 billion ($8.16 billion) a year. The strategy, called the National Policy for Economy Clusters, will see the UAE aim to boost foreign trade by Dh15 billion over the next seven years. The launch of the strategy comes off the back of Comprehensive Economic Partnership Agreements (Cepas) it has made to boost trade ties with countries including Jordan, New Zealand and Angola.
Cepas the UAE had made with Australia and Malaysia began to take effect on 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,” said Said Bakhache, the IMF mission chief to the UAE.
The UAE's inflation rate is projected at 1.6 per cent this year and about 2 per cent over the medium term. However, the fund noted housing costs are expected to remain the primary source of price pressures in the UAE, which it said raises concerns over affordability.
The IMF also said the UAE's financial sector remains strong and that banks remain profitable. UAE Central Bank data showed bank deposits increased by more than 13 per cent on an annual basis in the second quarter, with lending up 11 per cent.
The fund also said the UAE's enhancements to its Dirham Monetary Framework were also welcome and are helping improve liquidity management.
The IMF's staff mission comes as the UAE continues to pursue its efforts to diversify away from oil. Part of this strategy has been the Emirates becoming a global hub for artificial intelligence, which has included a push to establish start-ups, as well as investments and partnerships from leaders in the industry including Mirosoft, Nvidia and OpenAI
“The UAE’s rapid emergence as a global AI hub offers significant opportunities,” Mr Bakhache said.
Gulf Co-operation Council
The UAE's economic strength this year reflects the broader resilience displayed by Gulf Co-operation Council (GCC) amid US President Donald Trump's shifting tariff strategies, which have dominated conversations around the global economic outlook.
Speaking at the GCC Ministerial Meeting in Kuwait, IMF managing director Kristalina Georgieva credit the region's central bankers and finance ministers implementing reforms for its stability during the sharp change in global trade policy.
“Despite this increasingly challenging environment, the GCC continues to deliver strong and steady performance and is still a bright spot in the world economy,” Ms Georgieva said.
“It is making the GCC more resilient, as evidenced by limited spillovers from tensions and conflicts in the region.”
Ms Georgieva added the IMF forecasts GCC growth to be between 3 and 2.5 per cent this year before expanding closer to 4 per cent in 2026 due to the strength of the non-hydrocarbon economy, unwinding of voluntary oil production cuts and expansion of natural gas production.
She cautioned that weaker oil demand could negatively impact oil prices and revenue, while a potential supply glut could emerge as Opec continues to unwind oil production amid weak demand.
The IMF chief said the fund said non-hydrocarbon GDP growth in the GCC could slow by 1.3 percentage points in a scenario in which oil prices temporarily fall to $40 a barrel.
The IMF is due to release its projections on the global economy during its annual meetings in Washington later this month.
Two products to make at home
Toilet cleaner
1 cup baking soda
1 cup castile soap
10-20 drops of lemon essential oil (or another oil of your choice)
Method:
1. Mix the baking soda and castile soap until you get a nice consistency.
2. Add the essential oil to the mix.
Air Freshener
100ml water
5 drops of the essential oil of your choice (note: lavender is a nice one for this)
Method:
1. Add water and oil to spray bottle to store.
2. Shake well before use.
Washmen Profile
Date Started: May 2015
Founders: Rami Shaar and Jad Halaoui
Based: Dubai, UAE
Sector: Laundry
Employees: 170
Funding: about $8m
Funders: Addventure, B&Y Partners, Clara Ventures, Cedar Mundi Partners, Henkel Ventures
What are the main cyber security threats?
Cyber crime - This includes fraud, impersonation, scams and deepfake technology, tactics that are increasingly targeting infrastructure and exploiting human vulnerabilities.
Cyber terrorism - Social media platforms are used to spread radical ideologies, misinformation and disinformation, often with the aim of disrupting critical infrastructure such as power grids.
Cyber warfare - Shaped by geopolitical tension, hostile actors seek to infiltrate and compromise national infrastructure, using one country’s systems as a springboard to launch attacks on others.
Ten tax points to be aware of in 2026
1. Domestic VAT refund amendments: request your refund within five years
If a business does not apply for the refund on time, they lose their credit.
2. E-invoicing in the UAE
Businesses should continue preparing for the implementation of e-invoicing in the UAE, with 2026 a preparation and transition period ahead of phased mandatory adoption.
3. More tax audits
Tax authorities are increasingly using data already available across multiple filings to identify audit risks.
4. More beneficial VAT and excise tax penalty regime
Tax disputes are expected to become more frequent and more structured, with clearer administrative objection and appeal processes. The UAE has adopted a new penalty regime for VAT and excise disputes, which now mirrors the penalty regime for corporate tax.
5. Greater emphasis on statutory audit
There is a greater need for the accuracy of financial statements. The International Financial Reporting Standards standards need to be strictly adhered to and, as a result, the quality of the audits will need to increase.
6. Further transfer pricing enforcement
Transfer pricing enforcement, which refers to the practice of establishing prices for internal transactions between related entities, is expected to broaden in scope. The UAE will shortly open the possibility to negotiate advance pricing agreements, or essentially rulings for transfer pricing purposes.
7. Limited time periods for audits
Recent amendments also introduce a default five-year limitation period for tax audits and assessments, subject to specific statutory exceptions. While the standard audit and assessment period is five years, this may be extended to up to 15 years in cases involving fraud or tax evasion.
8. Pillar 2 implementation
Many multinational groups will begin to feel the practical effect of the Domestic Minimum Top-Up Tax (DMTT), the UAE's implementation of the OECD’s global minimum tax under Pillar 2. While the rules apply for financial years starting on or after January 1, 2025, it is 2026 that marks the transition to an operational phase.
9. Reduced compliance obligations for imported goods and services
Businesses that apply the reverse-charge mechanism for VAT purposes in the UAE may benefit from reduced compliance obligations.
10. Substance and CbC reporting focus
Tax authorities are expected to continue strengthening the enforcement of economic substance and Country-by-Country (CbC) reporting frameworks. In the UAE, these regimes are increasingly being used as risk-assessment tools, providing tax authorities with a comprehensive view of multinational groups’ global footprints and enabling them to assess whether profits are aligned with real economic activity.
Contributed by Thomas Vanhee and Hend Rashwan, Aurifer
Labour dispute
The insured employee may still file an ILOE claim even if a labour dispute is ongoing post termination, but the insurer may suspend or reject payment, until the courts resolve the dispute, especially if the reason for termination is contested. The outcome of the labour court proceedings can directly affect eligibility.
- Abdullah Ishnaneh, Partner, BSA Law
The specs: 2018 Nissan Patrol Nismo
Price: base / as tested: Dh382,000
Engine: 5.6-litre V8
Gearbox: Seven-speed automatic
Power: 428hp @ 5,800rpm
Torque: 560Nm @ 3,600rpm
Fuel economy, combined: 12.7L / 100km
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Rock in a Hard Place: Music and Mayhem in the Middle East
Orlando Crowcroft
Zed Books
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Sarfira
Director: Sudha Kongara Prasad
Starring: Akshay Kumar, Radhika Madan, Paresh Rawal
Rating: 2/5
THE SPECS
Engine: 1.6-litre turbo
Transmission: six-speed automatic
Power: 165hp
Torque: 240Nm
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UAE tour of the Netherlands
UAE squad: Rohan Mustafa (captain), Shaiman Anwar, Ghulam Shabber, Mohammed Qasim, Rameez Shahzad, Mohammed Usman, Adnan Mufti, Chirag Suri, Ahmed Raza, Imran Haider, Mohammed Naveed, Amjad Javed, Zahoor Khan, Qadeer Ahmed
Fixtures:
Monday, 1st 50-over match
Wednesday, 2nd 50-over match
Thursday, 3rd 50-over match
FORSPOKEN
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The specs
Engine: Direct injection 4-cylinder 1.4-litre
Power: 150hp
Torque: 250Nm
Price: From Dh139,000
On sale: Now
More from Neighbourhood Watch
Winners
Best Men's Player of the Year: Kylian Mbappe (PSG)
Maradona Award for Best Goal Scorer of the Year: Robert Lewandowski (Bayern Munich)
TikTok Fans’ Player of the Year: Robert Lewandowski
Top Goal Scorer of All Time: Cristiano Ronaldo (Manchester United)
Best Women's Player of the Year: Alexia Putellas (Barcelona)
Best Men's Club of the Year: Chelsea
Best Women's Club of the Year: Barcelona
Best Defender of the Year: Leonardo Bonucci (Juventus/Italy)
Best Goalkeeper of the Year: Gianluigi Donnarumma (PSG/Italy)
Best Coach of the Year: Roberto Mancini (Italy)
Best National Team of the Year: Italy
Best Agent of the Year: Federico Pastorello
Best Sporting Director of the Year: Txiki Begiristain (Manchester City)
Player Career Award: Ronaldinho