UAE economy to grow 4% in 2025

• The UAE economy will see a strong growth of four per cent in 2025 and 2026, higher than last year, the World Bank said in its latest report.

  The UAE is projected to grow 4.0 per cent in 2025, slightly down by 0.1 per cent from the World Bank’s forecast in June 2024.

But the UAE’s growth projection for 2025 is higher than last year’s 3.3 per cent, which was revised down by 0.6 per cent in its latest Global Economic Prospects report.

The global institution maintained that the Emirates’ economy will remain the fastest-growing economy in the Gulf region in 2025, outpacing Saudi Arabia (3.4 per cent), Bahrain (3.3 per cent), Qatar (2.7 per cent), Oman (2.4 per cent) and Kuwait (1.7 per cent).

World Bank hiked UAE’s next year growth forecast for 2026 by 0.1 per cent to 4.1 per cent, making it the third fastest growing economy in the GCC after Qatar (5.5 per cent) and Saudi Arabia (5.4 per cent).

Regionally, it slashed the Gulf Cooperation Council’s (GCC) growth forecast by 1.4 per cent to 3.3 per cent for 2025, but hiked next year’s projection to 4.6 per cent, up 1.1 per cent.

In GCC, growth is estimated to have picked up to 1.6 per cent in 2024, primarily because of strong non-oil activity supported by robust labour markets and a recovery in capital inflows.

It said monetary easing in GCC countries is anticipated to continue in tandem with projected monetary policy easing in the US and favourable financial conditions, supporting activity over the forecast horizon.

Growth in the Middle East and North Africa (Mena) is expected to pick up to 3.4 per cent in 2025 and 4.1 per cent in 2026, primarily reflecting the gradual expansion of oil production.

The outlook for 2025 has been downgraded by 0.8 percentage points, mainly because Opec+ members extended some of the voluntary oil production cuts – previously expected to be lifted at the end of 2024 in the June projections.

However, the outlook is subject to particularly high uncertainty given the continuing conflict in the region.

The International Monetary Fund (IMF) also revised down its Mena growth projection for 2025 by 0.5 per cent to 3.5 per cent and by 0.3 per cent to 3.9 per cent for 2026.

IMF said energy commodity prices are expected to decline by 2.6 per cent in 2025, more than assumed in October. This reflects a decline in oil prices driven by weak Chinese demand and strong supply from countries outside of Opec+, partly offset by increases in gas prices as a result of colder-than-expected weather and supply disruptions, including the ongoing conflict in the Middle East.