FAB, BMI optimistic over the UAE’s growth prospects in 2025: First Abu Dhabi Bank (FAB) penciled in a forecast of 5.6% growth for the UAE, while Fitch Solutions’ research unit BMI said it expects growth to come in at 5.1%, FAB and BMI said in separate reports — namely the 2025 Global Investment Outlook report (pdf) and the MENA Monthly Outlook (pdf). FAB estimated growth to come in at 4.5% in 2024, while BMI saw growth coming in at 3.8%.

Driving the growth: “The non-oil sector will strengthen due to easing inflationary pressures especially in the transport section, lower cost of borrowing, and a large pipeline of projects,” BMI said. “Progress on diversification-related reforms along with a growing high-income population will further boost foreign investment, especially in sectors such as real estate, financial and technology,” BMI added.

The bank continues to favor the UAE and Saudi Arabia, but said it also remains optimistic about emerging opportunities in Kuwait, Qatar, and Bahrain. For FAB, Dubai represents a "compelling investment opportunity,” complete with booming growth in the hospitality and real estate sectors, placing the emirate on top of the bank’s “preferred allocation” in its larger outlook for the region. Dubai is followed closely by Abu Dhabi, whose diversification potential and expected healthy corporate earnings in 2025 make it primed for positive growth during the year, according to the report.

These predictions are more optimistic than most: FAB and BMI have a more optimistic outlook than that of the International Monetary Fund (IMF) and the World Bank — both of which predicted 4% growth for the UAE this year — as well as that of the Central Bank of the UAE (CBUAE), which penciled in a slightly higher growth estimate of 4.5%.

ON THE GCC FRONT-

FAB, BMI see growth doubling across the GCC this year: FAB and BMI both penciled in a prediction of growth in the GCC reaching 4.2% in 2025, up from estimates of 1.8% for FAB and 2.1% for BMI last year.

FAB sees the growth being driven by “rising/stable oil prices and enhanced non-oil economic contributions,” with investments in tech, healthcare, financial services, and other sectors in GCC countries — particularly in the UAE and Saudi Arabia — projected to fuel future GDP growth.

FAB’s outlook for the GCC is also more optimistic than others: Emirates NBD sees headline growth in the GCC accelerating to 3.5% y-o-y this year. Meanwhile, the World Bank penciled in a prediction of 3.4% growth for the bloc this year, and 4.1% growth in 2026.

Investors cannot afford to sleep on the GCC: For the region as a whole, a “strategic focus on economic diversification, infrastructure development and technological advancement positions the region as an emerging investment hub,” according to FAB, adding that equity investors can unlock significant opportunities within the region. “As the GCC continues to evolve, investors will not only need to embrace its complexities, but also recognize the vast potential for growth and long-term rewards,” the report concluded.

Strong relations with Trump could bear (economic) fruit: “Trump holds good relations with Gulf markets' leaders, with Trump-related organizations heavily invested in Gulf markets like Saudi Arabia, the UAE and Oman. This could possibly materialise in economic and political benefits during his tenure,” according to BMI.

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