The MENA region is expected to outpace global economic growth in 2026, according to the Mastercard Economics Institute’s annual forecast released December 10. The MENA economic outlook 2026 anticipates regional GDP growth of 3.6% year-on-year, compared to global GDP growth of 3.1%. Saudi Arabia is projected to grow 3.6% overall, with non-oil GDP approaching 5%, supported by Vision 2030 investments and digital transformation initiatives.

The report identifies investment, AI adoption, and fiscal expansion as key drivers. However, it also flags geopolitical tensions and climate-related challenges as risks to the outlook.

Key Takeaways

  • MENA GDP projected at 3.6% growth, outperforming global 3.1% forecast
  • Saudi Arabia’s non-oil GDP expected to reach approximately 5% growth
  • Qatar leads regional growth at 4.9%, driven by LNG production expansion
  • GCC inflation stable at 2%; oil-importing economies slowing to 6.7%
  • Digital transformation and AI integration identified as productivity boosters

Saudi Arabia and GCC Growth Projections

Saudi Arabia’s GDP is forecast to increase 3.6% in 2026, according to Mastercard Economics Institute. The report highlights that non-oil GDP is expected to be stronger at close to 5%, reflecting economic diversification progress under Vision 2030.

The UAE is projected to grow 4.3%, with similar non-oil sector strength at approximately 5%. Meanwhile, Qatar leads the GCC with 4.9% growth, driven by higher liquified natural gas production.

Other GCC markets show varied trajectories. Oman is expected to grow 3.3%, Bahrain 3.1%, and Kuwait 2.5%. Pakistan’s economy is forecast to expand 3.6% next year.

Egypt and Oil-Importing Economies

Egypt is projected to achieve 4.4% GDP growth in 2026, the second-highest in the region. The country has attracted substantial investment in green hydrogen and solar power projects, capitalizing on favorable geography and climate conditions.

Inflation in oil-importing economies is expected to slow to an average of 6.7%. Disinflation, aided by a weaker US dollar and lower energy prices, may allow central banks to reduce interest rates. This could ease cost-of-living pressures for consumers across the region.

Investment Driving Economic Transformation

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

GCC countries are channeling substantial resources into renewables, construction, and technology, according to the report. In line with long-term strategies like Saudi Arabia’s Vision 2030 and the UAE National Strategy for Artificial Intelligence 2031, these investments are expected to support non-oil growth and job creation.

Foreign direct investment is also increasing in oil-importing countries, particularly in renewable energy sectors. Additionally, reduced borrowing costs and controlled inflation are expected to benefit consumers, spurring demand in real estate, tourism, and retail sectors.

Digital Transformation and AI Integration

The Mastercard Economics Institute anticipates digital transformation will boost productivity and growth across the region. The report specifically highlights deeper AI integration as a key factor, with the Middle East expanding through major investments in digital infrastructure.

However, the report acknowledges risks to the outlook. Geopolitical tensions and climate-related challenges may disrupt investment and economic activity in 2026.

SME Digitalization and Trade Shifts

Digital tools are increasingly enabling small businesses to streamline operations and reduce costs. In the UAE, SMEs account for just over 37% of retail spending, and their share of e-commerce has grown year-on-year.

Furthermore, trade in the MENA region has been gradually shifting away from advanced economies toward other countries within the EEMEA region and emerging markets over the past two decades. This trend continues despite threats from higher tariffs and elevated geopolitical tension.

Consumer Spending Patterns

Consumers worldwide will remain price-conscious in 2026, according to the forecast. They will continue to prioritize meaningful experiences such as travel and live events, while remaining price-sensitive for necessary goods. The report describes this as “savvy” spending focused on international, tech-enabled, and value-conscious purchases.

The Economic Outlook 2026 report draws on public and proprietary datasets, including aggregated and anonymized Mastercard sales activity and economic modeling. The institute notes that forecasts do not reflect expectations for Mastercard’s operational or financial performance.