UAE economy expected to stay resilient next year

Resilience is likely to be the predominant headline for UAE’s economic outlook in 2025, after the country managed to maintain its economic and financial stability despite the ongoing regional turmoil, analysts say.

Key factors driving this resilience include strong consumer spending, record growth in foreign direct investment (FDI) and successful economic diversification efforts.

The UAE’s position as a global trade hub, linking Europe, Africa, and Asia, coupled with its reputation as a real estate haven, continues to bolster its growth trajectory. In fact, October saw record-breaking real estate activity, with 19,390 residential transactions, bringing the year-to-date total to 140,000 units, up 36 per cent year on year.

“The UAE is projected to sustain robust growth in 2025, with GDP forecasts ranging from 6.2 per cent by the CBUAE, 5.1 per cent by the IMF, and 4.1 per cent by the World Bank”, said Razan Hilal, Market Analyst, CMT at Forex.com. She added: “Inflation in the UAE has been gradually declining, reaching 2.4 per cent year on year in October, the slowest pace since August 2023. The monetary easing cycle initiated by the Federal Reserve and mirrored by the CBUAE is expected to lower interest rates further, boosting economic growth in 2025.”

This optimistic outlook is expected to persist despite potential risks tied up to a number of local, regional and global factors, starting with restricted oil revenues as the UAE could face challenges from declining oil prices, exacerbated by oversupply risks from non-Opec countries and China’s slowing economy. Nonetheless, China’s vow to shift to a moderately loose monetary policy in 2025, its first since 2011, could stabilize demand.

Hilal added: “Gold prices remain crucial, too, with potential gains reflecting increased haven demand during uncertain times. This poses a challenge for the UAE to sustain its safe-haven status while navigating the global turbulence expected in 2025.”