UAE remains region’s strongest economic performer, says top banker

The UAE economy has managed a soft landing and remains the region’s strongest performer, a senior official said.

“We expect growth in the UAE and wider GCC region to accelerate in 2025, as oil output expands and monetary policy eases. The UAE should benefit from its flexibility in oil production and a vibrant non-oil economy,” Michael Strobaek, global chief investment officer, Bank Lombard Odier, told Khaleej Times in an interview.

Pegs to the US dollar tie GCC monetary policy decisions to those of the Federal Reserve. Strobaek expects 150 basis points of rate cuts by regional central banks, mirroring those of the Fed in the next 12 months and supporting stability in the credit cycle. “Besides, despite the initiatives to deepen the region’s financial links to China and other emerging markets, the GCC countries have been maintaining significant US dollar reserves to defend their pegs. Although the countries’ international reserves have declined in the past few years, their levels still exceed those in many other regions. We see few imminent risks of a shift in policy on the currency pegs,” he added.

Strobaek expects Dubai’s real estate market to maintain its momentum, supported by the economic rebound and rate cuts, despite the strong gains over the past years. “We expect inflation in the UAE to behave well in 2025, given the stability in global goods prices and despite persistent housing inflation pressures. Of course, the UAE’s economic model makes its economy sensitive to geopolitical and global trade dynamics, particularly with China,” he added.

Revamping of infrastructure is a powerful global trend Strobaek sees unfolding in the world economy. The transition of the current global economic model to a low-carbon, nature-positive, technology-embedded one, accelerated by demographic and geopolitical shifts, demands an overhaul of the world’s infrastructure. “This is a fundamental transformation of our society where long-term benefits outweigh the costs. Governments, institutions, and private investors all play a role in catalysing infrastructure projects, and the private sector is particularly well-positioned in the overhaul of power, transport, water, and communication infrastructures around the world. While energy and transportation infrastructure are cornerstones of modern economic infrastructure, water and communication infrastructure will require no less focus. At Lombard Odier, we have done significant research into infrastructure as one of six structural trends that are reshaping the global economy and opening new investment opportunities for global investors,” he added.