Projected Economic Expansion in UAE for 2025 and 2026 Reduced According to Central Bank's Estimates
The Central Bank of UAE (CBUAE) has adjusted its economic growth projections for 2025 and 2026 by 0.3%, largely due to lower oil prices, slower global activity, and heightened uncertainty. According to their latest report, the UAE is predicted to grow 4.4% in 2025 and 5.4% in 2026. Compared to the 2024 annual report, the previous projections were set at 4.7% and 5.7%, respectively.
The slight drop in the GDP growth projection is not all doom and gloom, as the adjusted growth rate in 2025 still outpaces that of 2024. For 2026, the rate was revised downwards by 0.3% to 5.4%. The report attributes this revision to weaker external demand and subdued oil prices.
While the growth outlook remains positive, the CBUAE points out that the projections for 2025 and 2026 are surrounded by considerable risks. On the negative side, risks stem from global trade policy uncertainties and the harsher effects of lower oil prices on the non-hydrocarbon sector. On the flip side, potential sources of growth include the successful execution of reforms and diversification strategies, the signing of trade agreements, investment projects, and the integration of artificial intelligence to bolster the economy's resilience.
S&P Global Market Intelligence has predicted even more impressive growth for the UAE economy, according to their reports. They expect the UAE to accelerate to 5.4% in 2025 and 6.5% in 2026, driven by the rebound in oil sector output and strong domestic demand. Conversely, as demand remains robust, inflation in 2025 and 2026 is forecasted to gradually increase, according to S&P Global Market Intelligence.
In recent news, tensions between the US and China have resulted in a significant impact on investor sentiment, and international think tanks are forecasting a slower global economy. Additionally, oil prices have trended lower, trading in the mid-$60s per barrel before the Israel-Iran conflict this month. Furthermore, the OPEC+ recently announced increased production, which might put additional pressure on oil prices.
Despite the global challenges, the UAE's economy is expected to be among the most resilient in the GCC region due to its diversification and reduced reliance on oil. The non-oil sector is projected to grow by 4.5% in 2026 and maintain a steady growth rate. The UAE economy expanded by 4.0% in 2024, primarily due to a 5.0% expansion in non-oil activities and a 1.0% recovery in the hydrocarbon sector.
By diversifying its economy, the UAE has positioned itself for a more robust recovery despite external challenges.
- The adjusted economic growth projections for the UAE in 2025 and 2026, despite a slight drop, still present a positive outlook, particularly for the real estate and business sectors, given the predicted growth rate in these years.
- In the realm of business and finance, the UAE's economy, buoyed by diversification and reduced reliance on oil, is forecasted to remain resilient amidst global challenges, with the non-oil sector expected to grow robustly, providing opportunities in various industries including real estate.
