UAE to record a smaller budget surplus than expected: Emirates NBD brought down its forecast for the UAE’s budget surplus to the equivalent of 1.8% of GDP in 2025, down from its previous forecast of 2.7% of GDP this year, and down from last year’s estimated surplus of 3.4% of GDP, the bank wrote in a research note (pdf).

The GCC as a whole is also set to experience a deficit: Emirates NBD now sees a weighted average budget deficit of 3.6% of GDP in 2025 for the GCC bloc, up from its previous estimate of a budget deficit of 2.51% relative to GDP, and up from an estimated deficit of just 1% of GDP last year. Only the UAE and Qatar are expected to see a budget surplus in both 2025 and 2026.

The bank cites lower oil prices as the reason behind its revision, saying that lower prices will “drag on budget balances across the GCC.” Assuming an oil price of around USD 65 for the rest of the year, export receipts could be 4-6% of GDP lower than in 2024, Capital Economics’ Middle East and North Africa economist James Swanston told EnterpriseAM UAE.

“This will, all else equal, cause current account positions to deteriorate,” Swanston said. “And given that a large proportion of oil export receipts flow to the government, budget balances will worsen too,” he added. On the bright side: The UAE is able to comfortably weather an oil price of USD 65 or even lower, Swanston said.

How this compares to other estimates: Emirates NBD’s forecast for the UAE in 2025 is significantly lower than that of Oxford Economics, which predicted a budget surplus of 4.1% this year back in December, while Capital Intelligence previously expected the budget surplus to come in at 3.8% in 2025.

REMEMBER- The government plans to spend more this year: Federal National Council approved the UAE's largest national budget to date back in November, totaling AED 71.5 bn for both revenues and expenditures for 2025, with spending expected to rise 12% y-o-y.

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