UAE non-oil economy set to grow 5.2% in 2025, real estate, tourism among major drivers
'Real estate will likely continue to grow and remain one of the key growth drivers in 2025. We haven't seen signals that would point to an imminent downturn of the market, which leads us to anticipate further growth of Dubai's and, to a lesser extent, UAE's real estate market in 2025,' Ralf Wiegert, head of Middle East and Northern Africa economics, S&P Global Market Intelligence, told Khaleej Times.
Real estate has been one of the major non-oil drivers of UAE –especially Dubai– over the past four years, attracting billions of dirhams of investments every year.
He noted that services, including tourism, real estate, financials, retail, and trade and transport will drive non-oil economic growth in the country this year.
The growth rate is in line with the International Monetary Fund's (IMF) real GDP growth forecast of 5.1 per cent for 2025—the highest in the Gulf Cooperation Council (GCC) region.
Kristalina Georgieva, managing director of IMF, has projected that digital innovation, with artificial intelligence (AI) technologies, is expected to raise UAE's GDP significantly by 2030. 'More R&D spending will further enhance productivity,' she added.
She pointed out that reducing the state's footprint in the economy and strengthening governance can yield significant benefits for the Middle East and North African countries.
'For example, Saudi Arabia's regulatory improvements have fostered private sector investment, especially in the non-oil economy. The UAE's National Agenda for Entrepreneurship has supported a vibrant startup community, and Morocco's New Model of Development aims to spur markets by improving public sector governance,' she has said.
Oil sector
Wiegert said the oil sector will become a growth driver in 2025 given the adjustment to the UAE's oil export quota by Opec.
Capital Economics said in a note that rises in oil output from Opec+ starting in April will gradually provide a boost to GDP growth in the Gulf states.
'But if oil prices slide further, governments will likely need to tighten fiscal policy further, weighing on non-oil GDP growth this year,' it said.
Newswires reported that the Opec+ group will raise oil output for a second consecutive month in May. It is expected that the group will raise output by 135,000 barrels per day in May 2025.
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