IMF projects UAE’s 2025 growth to beat global average

Dubai: The UAE is projected to expand its economy by 4.8% in 2025, following an estimated 4.0% growth in 2024, according to the IMF. Growth is expected to accelerate further to 5.0% in 2026, driven by non-hydrocarbon strength and a rebound in oil output as OPEC+ ramps up production.

“The UAE has shown strong resilience to global uncertainty, regional conflicts, and oil market volatility. Supported by sustained diversification and expanding exports, the UAE is projected to grow strongly, well above the global average in 2025,” the IMF said.

Non-oil sectors such as tourism, construction, and financial services remain the backbone of expansion. The Fund’s report notes that structural reforms, major infrastructure projects and continued investment into services will underpin growth.

Inflation forecast

Inflation is forecast at 1.6% 2025, rising toward 2% over the medium term. The IMF highlights housing costs, in particular rent and real estate pressures, as the principal source of price tensions. Tradables (goods facing global competition) are expected to see more subdued pressures.

On the external front, the current account strengthened in 2024. Rising exports of goods and services, especially non-hydrocarbon, combined with slower import growth, contributed to the improvement. The IMF sees ongoing efforts to expand Comprehensive Economic Partnership Agreements (CEPAs) as a lever to deepen trade and bolster resilience.

“The UAE is expected to remain resilient to global policy uncertainty. Ongoing efforts to expand CEPAs will further bolster resilience and support diversification,” the report says. Financial markets and capital flows continue to demonstrate robustness, underscoring investor confidence.

The real estate sector remains active. External demand, population growth, and structural reforms are sustaining momentum. The IMF notes that risks are muted by reduced exposure of banks to real estate (now around 18% of risk-weighted assets) and a high share of self-financed transactions. But the Fund cautions about possible capital outflow reversals or shifts in investor sentiment.