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CBUAE revises down its growth forecast for the UAE this year: The Central Bank of the UAE (CBUAE) now sees real GDP growing by 4.4% in 2025 — up from 4.0% in 2024 —- before accelerating further to 5.4% in 2026, it said in its Quarterly Economic Review (pdf). The projections for both this year and next year are down 0.3 percentage points from the CBUAE’s last forecast in March, when it predicted 4.7% growth and 5.7% growth in 2025 and 2026, respectively.
The downward revision was attributed to “the effects of slower global economic activity, increased uncertainty and falling oil prices,” the report reads.
Driving the growth: The hydrocarbon sector is expected to grow by 4.1% in 2025 — up from just 1.0% in 2024 — before expanding further to 8.1% in 2026. This is attributed to OPEC+ production plans as well as “upstream and midstream activities in the oil and gas sector.” Meanwhile, non-oil growth is set to slow down to 4.5% this year, compared to 5% growth in 2024. The non-oil sector will continue to grow on the back of ongoing investment-friendly policies that foster innovation in sectors from manufacturing and tourism to transport and the digital economy, the report said
Downside risks remain: Growth projections for both 2025 and 2026 are marred by risks stemming from issues including unresolved global trade policy, as well as lower oil prices and renewed geopolitical tensions.
On the upside, the UAE’s growth prospects could be boosted by “the successful execution of reform agendas combined with diversification strategies,” as well as the signing of trade agreements, investment projects, and further integration of artificial intelligence, the report read.
As for inflation, the CBUAE slightly lowered its inflation forecast for 2025 down by a 0.1 percentage point to 1.9, which it attributed to a “continuous downward trend in transportation costs” and “moderating energy prices.” Inflation is expected to remain unchanged in 2026, reflecting a 0.2 percentage point downward revision from the bank’s previous forecast for next year.
The regional outlook: The CBUAE sees economic growth in the GCC region increasing to 3.2% in 2025, up from an estimated 1.8% in 2024, with the UAE and KSA cited as the main drivers of the uptick. This is a 0.3 percentage point decrease from the bank’s previous forecast, which is attributed to “lower hydrocarbon revenues and, to some extent, non-hydrocarbon sectors.” Growth in the GCC is expected to accelerate to 4.3% in 2026, due to a recovery in oil production that is expected to come in tandem with a robust performance in the non-hydrocarbon sector.
