The Central Bank of the UAE (CBUAE) now expects real GDP to grow 4.9% in 2025, up from a 4.4% projection in June, according to its latest Quarterly Economic Review (pdf). The revision, which comes on the back of momentum in the non-oil sector and higher oil production, reverses a downgrade from June, when the central bank had cut its 2025 forecast to 4.4% from 4.7% due to weaker global economic activity and lower oil prices.

Growth is forecast to accelerate to 5.3% in 2026 — slightly below the 5.4% projected earlier.

Hydrocarbons are to thank: Hydrocarbon GDP is forecast to rise 5.8% in 2025 — up significantly from an earlier forecast of 4.1% — and 6.5% in 2026, after stagnating at just 1% in 2024. The forecast comes after Opec+ last month approved an oil production increase of 547k bbl / d for September, wrapping up its supply restoration strategy ahead of schedule. The hike reverses the bloc’s 2.2 mn bbl / d cut from in 2023, and also allows the UAE a 300k bbl / d quota increase ahead of schedule.

A boost from steady non-oil momentum as well: The CBUAE maintained its forecast for non-hydrocarbon GDP this year at 4.5%, while revising up next year’s forecast to 4.8% from 4.5% earlier. It attributed the upward revision to expectations of indirect tailwinds from rising oil production, including higher investment, government spending, and growing confidence in the economy.

REMEMBER- The non-oil sector grew 5.3% y-o-y in 1Q, led by manufacturing, financial services, construction, and real estate. PMI data shows an uptick in output levels despite softening new orders, with trade and tourism being key growth drivers. Meanwhile, non-oil foreign trade jumped 24% y-o-y to nearly AED 1.7 tn in 1H 2025, with exports up 44.7% to a record AED 369.5 bn, accounting for 21.4% of total non-oil trade. Trade made up the largest share of non-oil GDP in 1Q 2025 at 15.6%, with the sector now on track to hit AED 4 tn by 2027 — four years ahead of the original 2031 target.

Inflation easing: Headline inflation stood at 0.6% y-o-y in 2Q, down from 1.4% in 1Q as energy costs dropped. The CBUAE cut its 2025 inflation forecast to 1.5%, from 1.9%, on the back of falling food and transport costs. Inflation is expected to edge up to 1.8% in 2026, with the rise coming primarily from the impact of base effects.

How CBUAE’s forecast compares: The CBUAE’s 4.9% projection is broadly in line with Standard Chartered’s 5% forecast for 2025, but above Fitch Solutions’ BMI (4.3%) and the IMF (4%). Further ahead, Standard Chartered expects growth to moderate to 4% in the following two years.

Regional outlook: The CBUAE sees GCC growth rising to 3.6% in 2025, up from 2.2% in 2024, before accelerating to 4.3% in 2026. That marks an upward revision from June, when the central bank had projected 3.2% growth in 2025, though its 2026 forecast is unchanged.

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