The Central Bank of the UAE (CBUAE) has once again raised its real GDP growth outlook for 2025 to 5%, up from a 4.9% projection in September, which was itself a revision from earlier in June, according to its latest Quarterly Economic Review (pdf). The forecast for next year, however, was revised down by 0.1 percentage point to 5.2%, though no clear reason was given.

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The reasons behind the upgrade for 2025? The same as last time: Persistently strong performance in the non-oil sector and a rebound in oil production.

The forecast for non-hydrocarbon GDP for the year was raised to 4.9% from 4.5% in its previous estimate, while lowering next year’s outlook to 4.7% from 4.8%. The oil GDP, on the other hand, is expected to grow 5.4% this year, down from a 5.8% forecast in September.

REMEMBER- Crude oil production averaged 3.035 mn bbl / d, a 3.7% y-o-y increase, in the first nine months of the year, driven by a faster-than-expected reversal of oil production cuts after Opec+ revised its quotas.

Looking ahead, oil GDP is expected to grow 6.7% in 2026, up 0.2 percentage points from the previous estimate. This comes as Opec+ plans to keep oil supply steady during the first quarter of the year and then resume supply hikes.

IN CONTEXT- The UAE’s non-oil economy grew 6.1% y-o-y in 2Q 2025, primarily driven by financial and ins. services, manufacturing, and construction, alongside wholesale and retail and real estate. PMI data shows the UAE remained in expansion territory at 53.8 in October 2025, helped by strong domestic demand. Meanwhile, non-oil foreign trade grew 23.6% y-o-y in 1H 2025, reaching AED 1.62 tn, with exports surging 45.3% y-o-y to AED 360.1 bn.

Cooling inflation: The CBUAE revised its 2025 inflation forecast downward to 1.3% from 1.5% on the back of decreasing food and energy costs, with headline inflation standing at 1.1% y-o-y in 3Q 2025, up from 0.6% in 2Q. The central bank kept its 2026 inflation forecast unchanged at 1.8%, attributing the projected acceleration to base effects from the low rates observed in 2025.

How CBUAE’s forecast compares: The central bank’s forecast is more optimistic than the IMF and World bank’s 4.8% projection for 2025 and 5% next year. Fitch Solutions’ research unit BMI also sees our economy growing at 5.2% in 2025, before accelerating to 5.6% next year.

The regional outlook

The CBUAE sees GCC growth rising from 2.2% in 2024 to 4.0% this year and 4.5% in 2026 — an upward revision from September, when the central bank had projected 3.6% growth in 2025 and 4.3% in the next year.

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