IMF Chief Praises UAE Diversification As Arab Economies Face Global Uncertainty

2026-02-02 04:43:51

(MENAFN- Khaleej Times) She says that despite this uncertainty, world economic growth is better than anticipated, but warned that global resilience will be tested

PUBLISHED: Mon 2 Feb 2026, 11:52 AM

By:
Nasreen Abdulla

Economic growth in Arab countries remain positive despite challenges but it is important these states strengthen defenses, build resilience, and harness the power of artificial intelligence, according to Kristalina Georgieva, Managing Director of the International Monetary Fund (IMF). She also commended the UAE for diversifying its economy and being a leader in integrating AI both vertically and horizontally across its workforce.

Speaking on Monday at the Arab Fiscal Forum at the Madinat Jumeirah in Dubai, she said that the gathering was taking place at“pivotal moment” where a lot of change is occurring.“The world is undergoing profound shifts in geopolitics, trade policy, technology and in demographics,” she said.“These shifts are converging to create enormous uncertainty.”

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She said that despite this uncertainty, world economic growth is better than anticipated, but warned that global resilience will be tested. The forum which took place as part of the World Government Summit (WGS) saw economic leaders and policy makers from across the region gather to discuss about priorities in the coming years, fostering developmental finance and revamping expenditure policies.

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UAE as a model

At the session, UAE's Minister of State for Financial Affairs Mohamed Al Hussaini said that country's national economy achieved 4 percent growth in 2024 with GDP reaching 1.77 trillion, out of which the non-oil sector contributed to almost 80 percent of the total economy.“Furthermore, the IMF projects that the UAE economy will achieve a growth rate of 4.8 percent in 2025 and 5 percent in 2026 underscore resilience and ability to navigate global fluctuations,” he said.

Kristalina commended these figures that achieving 80 per cent of total economy with non-oil sector makes UAE a model for economic diversification in the region.“It is incredibly impressive to see how fast diversification is progressing, not only here in the UAE but across many energy-exporting countries,” she said.

Growth outlook

She noted that the IMF has slightly upgraded global growth projections for this year and next, describing the revisions as“small but broad-based” while saying that there across the board including US, India, China and Eurozone. For the Arab region, the IMF expects growth to rise to about 3.7 per cent, supported by increased oil production, lower energy prices for importers, strong remittances, and a rebound in tourism.

However, she cautioned that risks remain elevated. These include geopolitical tensions, rising public debt, fiscal pressures, and oil price volatility.“From the bottom of my heart, of all risks, conflict is the worst,” she said, warning that wars and displacement disproportionately harm low-income and fragile economies.

Fiscal discipline

Kristalina also highlighted the importance of strong fiscal institutions.“Your sound policies and your strong institutions are your best protection against vulnerabilities that will inevitably come in the future,” she told delegates. She urged governments to rebuild fiscal buffers, improve transparency and focus on creating conditions for growth rather than trying to directly drive it.

On technology, she highlighted artificial intelligence as a major opportunity to lift productivity. She praised the UAE for ensuring AI“penetrates the economy horizontally,” rather than remaining confined to isolated sectors.“This diffusion is going to play a very important role in the future,” she said, stressing the need to invest in skills and human capital alongside digital transformation.

Recalling the first Arab Fiscal Forum held ten years ago in Abu Dhabi, she said the initial focus was on domestic revenue mobilisation and modern tax systems.“Ten years later, we can proudly say that Arab countries have made tremendous progress,” she said, pointing to advances in fiscal transparency, VAT and excise taxes, subsidy reforms, and improved public financial management across the region.

“The work does not stop,” she added, calling on Arab economies to continue strengthening institutions to ensure stability and prosperity in an increasingly uncertain world.