UAE Growth Outlook Brightens on Non‑Oil and Oil Resurgence
UAE's economy is set to expand by 4.6% in 2025, bolstered by a strong non‑oil core and a gradual return in oil output, according to projections from the World Bank's June 'Global Economic Prospects' edition. This represents a 0.6‑point upward revision from January. The outlook for 2026 has also been upgraded to 4.9%, with growth anticipated to hold at that level in 2027.
At the heart of the upgrade is a projected 4.9% expansion of non‑oil sectors in 2025, fuelled by robust performances in tourism, construction, transportation and financial services. Dubai's aviation boom—revealed by a 10% rise in passenger volume, reaching 147.8 million in 2024—underpins much of this resilience, reinforcing the emirate's role as a global travel hub. Abu Dhabi Airport similarly saw passenger numbers surge to 29.4 million, marking growth of over 28% year‑on‑year.
Support from non‑oil diversification has been a long‑term objective of UAE policy. The nation now boasts one of the most diversified economies in the Gulf, with less reliance on hydrocarbons than its neighbours. Strategic infrastructure projects and reforms—such as streamlining business regulation and expanding economic partnership agreements—have reinforced this shift.
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The World Bank highlights a phased easing of OPEC+ oil‑production cuts between May 2025 and September 2026 as another key driver. The resumption of oil output is expected to boost oil‑GDP, even amid pressure from softer global oil prices. While the group plans to increase production by 411,000 barrels per day through mid‑2026, this will likely offer a measured uplift to gross domestic product.
UAE's fiscal strength is also supported by oil revenues, though the government foresees a narrowing of its fiscal surplus to approximately 4.2% of GDP in 2025, according to World Bank estimates. Strong international reserves—estimated at US$223 billion as of November 2024—and comprehensive tax reforms, including the introduction of a minimum domestic top‑up tax in January 2025, provide further fiscal buffers.
This macroeconomic outlook aligns with official growth readings for 2024. The UAE recorded real GDP growth of 3.9%, underpinned by a 4.6% climb in the non‑oil sector. These historic gains paved the way for the stronger forecasts now issued for 2025 onwards.
Globally, the World Bank warned of slumping growth—forecast at just 2.3% in 2025, the slowest outside recessions since 2008—due to trade tensions and policy uncertainty. Nearly 70% of national forecasts worldwide were downgraded as rising tariffs and sluggish demand took their toll. By contrast, growth in Gulf Cooperation Council economies, including the UAE, remains resilient, with peer forecasts of 3.2% in 2025, and 4.5% and 4.8% in 2026 and 2027 respectively.
Employment performance is expected to stay strong, with projected job growth at around 3.3% year‑on‑year in 2025 and unemployment holding at low levels, though youth and female unemployment may remain elevated. The central bank reported that hotel occupancy averaged 78% in 2024—a level sustained through 2023—highlighting the consistent strength of tourism.
Logistics and trade remain potential areas of vulnerability. The World Bank cautioned that this sector could see 'ongoing trade uncertainties and disruptions' which may constrain expansion. The global policy outlook, hinging on resolution of trade disputes and geopolitical stability, will shape the UAE's growth trajectory into the medium term.
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