We have a fresh batch of upbeat forecasts on the UAE’s economic growth, with the Central Bank of the UAE hiking its GDP forecast for the year, and the ICAEW expecting the country to remain resilient amid global headwinds.

CBUAE SEES 4.7% GROWTH THIS YEAR-

CBUAE revises up its growth forecast for the UAE: The Central Bank of the UAE (CBUAE) now sees real GDP growing by 4.7% in 2025 — up from an estimated 3.9% in 2024 — before accelerating further to 5.7% in 2026, it said in its Quarterly Economic Review (pdf). This year’s projection is up 0.2 percentage points from its last forecast in December, when it predicted 4.5% growth for 2025.

Driving the growth: Robust growth in both the nonhydrocarbon and hydrocarbon sectors is expected to drive growth in 2025. Non-oil growth is set to come in at 5.1% in 2025 and 4.8% in 2026, “driven by the strategic plans and policies implemented by the government to attract foreign investments and promote economic diversification.” Meanwhile, the hydrocarbon sector is expected to grow by 3.6% in 2025, before expanding to a whopping 8.5% in 2026, which the bank bases on expectations of increased oil production following Opec’s decision to hike supply and raise the UAE’s production quota starting next month.

Taking stock of 2024: Non-oil growth came in at 4.7% y-o-y in 3Q 2024, the CBUAE said, down from 4.8% the previous quarter, on the back of a deceleration in construction, transportation and storage, and financial ins. activities. Most of the decline was offset by an acceleration in manufacturing, trade and real estate activities.

Risks remain: An escalation of geopolitical tensions, global economic deceleration due to extended periods of high interest rates, uncertainty over trade policy, and “the possible spillovers of lower oil prices on the nonhydrocarbon sector” were all cited as potential risks that could impact the UAE’s growth prospects.

On the other hand, the “successful implementation of reforms, combined with diversification efforts, signed Comprehensive Economic Partnership Agreements, investment projects, and faster adoption of artificial intelligence” could all help boost the UAE’s economic performance.

As for inflation, the CBUAE kept its forecast unchanged at 2.0% in 2025 — well below the world average — and 2.1% in 2026, with the “non-tradable components of the consumer basket expected to be the main drivers.”

The CBUAE sees economic growth in the GCC region increasing to 3.5% in 2025, up from an estimated 1.7% in 2024. This is about 0.6 percentage points lower than the previous forecasts, due to the extension of the Opec+ production cuts until April. The central bank sees GCC growth accelerating to 4.5% next year.

MORE UPBEAT FORECASTS FOR THE UAE’S GROWTH-

The oil sector could grow 3.2% this year, following two years of contraction due to supply restrictions, according to the latest ICAEW Economic Insight report prepared by Oxford Economics. Meanwhile, the UAE’s non-oil sector is seen growing by 4.8% during the year, leading non-oil growth across the GCC alongside Saudi Arabia. The forecast is up five percentage points from the 4.3% it had penciled in in December.

More good news: Growth in the GCC is expected to withstand recent upheaval in global trade. The overall GCC economy is set to grow by 4.0% in 2025, up from an estimated 1.8% in 2024, despite rising global protectionism, geopolitical tensions, and an uncertain global economic outlook, ICAEW said.

Remember: Fitch Solutions’ research unit BMI sees MENA countries (and GCC countries in particular) being safe from direct tariffs from the Trump administration due to “economic and strategic considerations.” BMI argues that Saudi Arabia and the UAE’s investments in the US — specifically in AI — along with close relations with US President Donald Trump would make tariffs on both countries “counterproductive,” especially as Trump looks to “expand the Abraham Accords and reduce China’s influence in the Middle East,” the report reads.

How the forecasts compare: S&P Global and Fitch Solutions’ research unit BMI both see the UAE’s real GDP growing by 5.1% in 2025, while the International Monetary Fund and the World Bank revised their forecasts for the UAE’s economy this year to 4.0%.

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