The UAE’s GDP growth is projected to exceed 5 percent by 2025. Michael Bolliger, chief investment officer for Emerging Markets at UBS Global Wealth Management, shared this outlook during an online press briefing with the Emirates News Agency (WAM).
Bolliger noted that this positive growth forecast aligns closely with recent predictions from the International Monetary Fund (IMF), which has maintained its GDP growth estimate for the UAE at 4 percent for 2024 and anticipates an increase to 5.1 percent in 2025.
He emphasized that various global factors influence growth expectations for Gulf Cooperation Council (GCC) economies, particularly oil production and OPEC decisions. Encouraging elements such as stimulus measures from China, adjustments in monetary policy, and cuts to the reserve requirement rate are also expected to drive markets and the global economy toward recovery.
Bolliger remarked that these factors will significantly impact the UAE’s economic performance, both directly and indirectly, with expectations for the UAE economy to maintain its growth momentum and continue on an upward path.
Furthermore, he highlighted that decisions made by the United States Federal Reserve regarding monetary policy will play a crucial role in shaping the global economy in the near future, predicting a reduction of around 150 basis points in interest rates by the end of 2025.
IMF global economic projections
Last week, the IMF’s World Economic Outlook (WEO) projected that the UAE’s real GDP will stabilize at 4 percent in 2024, with an increase to 5.1 percent anticipated for 2025. This forecast, presented during the 2024 IMF/World Bank Group Annual Meetings, also indicated that the economies of the Middle East and Central Asia are expected to grow by 2.4 percent and 3.9 percent in 2024 and 2025, respectively. Globally, growth is projected to remain stable but subdued, with estimates of 3.2 percent for both 2024 and 2025, consistent with earlier projections from the July and April 2024 WEO reports.
Read more: UAE’s real GDP expected to expand by 5.1 percent in 2025, according to IMF
Inflation outlook
Global headline inflation is expected to decrease from an average of 6.7 percent in 2023 to 5.8 percent in 2024 and 4.3 percent in 2025, with advanced economies likely to achieve their inflation targets sooner than emerging markets.
Economic growth in major economies
The WEO indicated that the U.S. economy is projected to grow by 2.8 percent in 2024, tapering to 2.2 percent in 2025. Meanwhile, the Eurozone is expected to grow by around 0.8 percent this year and 1.2 percent next year.
World Bank economic update
Earlier this month, the World Bank’s latest semi-annual MENA Economic Update forecasted that the UAE’s gross domestic product (GDP) will rise to 3.3 percent in 2024, followed by growth of 4.1 percent in both 2025 and 2026. The report credited the anticipated growth next year to a rebound in oil production and stable external conditions. Additionally, it noted that this year’s GDP growth is driven by a 4.1 percent increase in the UAE’s non-oil sector, which remains a crucial engine of economic development through industries such as tourism, real estate, construction, transportation, and manufacturing.
The World Bank also projects a 1.2 percent increase in oil output for 2024, with a gradual reversal of voluntary production cuts expected, resulting in a phased rise in output from January to September 2025.
In its recent semi-annual MENA Economic Update, the World Bank reiterated that the UAE’s GDP growth is set at 3.3 percent for 2024, rising to 4.1 percent in 2025. The report forecasts a decline in the UAE’s current account surplus to 7.5 percent of GDP in 2024, down from 9.2 percent in 2023, despite ongoing efforts at diversification. For 2025, the MENA region is projected to grow by 3.8 percent, with GCC countries expected to strengthen to a 4.2 percent growth rate, up from 1.9 percent in 2024. Overall, the report anticipates a modest increase in regional GDP growth to 2.2 percent in real terms for 2024, up from 1.8 percent in 2023.
Central Bank projections
In a separate forecast last month, the Central Bank of the United Arab Emirates (CBUAE) estimated that the country’s real GDP would grow by 3.9 percent in 2024 and 6.2 percent in 2025. The central bank further anticipates strong performance in international trade throughout 2024 and 2025.
Robust non-hydrocarbon growth
According to the CBUAE’s June 2024 Economic Quarterly Review, non-hydrocarbon GDP growth is expected to remain robust at 5.4 percent in 2024 and 5.3 percent in 2025. The hydrocarbon sector is predicted to see a 0.3 percent increase in 2024, followed by a significant 8.4 percent rise in 2025.
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