UAE to remain fastest-growing economy in GCC

In 2025, the UAE is set to remain the fastest-growing economy in the GCC region due to its ability to increase oil production earlier than other Opec+ nations a recent report said.

According to the CEO Outlook report by KPMG, the UAE’s economy is forecasted to achieve 6.7 per cent growth in 2025, a significant increase from 3.8 per cent this year. This is likely to be primarily driven by its diversification efforts and strong trade relationships with neighbouring countries. “The nation’s positive economic outlook is supported by its thriving tourism sector and continued economic expansion,” KPMG noted.

Dubai particularly saw a surge in international visitors, with 1.77 million in January and 1.9 million in February 2024. Additionally, hotel guest spending is projected to rise from $723.4 billion in 2023 to $758.61 billion in 2024, according to the Department of Economy and Tourism (DET).

“Our latest CEO Outlook report highlights the UAE’s remarkable economic resilience and growth potential, with strategic investments in diversification and industrial capabilities positioning the nation as a leading hub for sustainable development and business innovation,” said Walter Palk, Partner, Head of Clients and Markets, KPMG Lower Gulf.

A strategic and safe environment

The UAE ranked 10th in the world in the 2023 Soft Power Index. This is its highest-ever global ranking, marking its fourth consecutive year as the leading nation in the Middle East. The index evaluates a country’s ability to influence others through cultural appeal, diplomatic relations, education, business and trade, governance, and digital engagement.

Beyond its robust economic influence, the UAE fosters cultural exchange, tourism and global connectivity. “Investments in aviation infrastructure by flagship airlines like Emirates and Etihad have extended the nation’s geopolitical reach to over 150 destinations worldwide,” the report said.

The UAE is implementing various structural reforms and making strategic investments to diversify its economy and boost its industrial capabilities, KPMG noted. “Significant initiatives include Abu Dhabi’s $10 billion investment in tourism infrastructure, Adnoc Gas’s $13 billion plan to expand gas operations globally and locally over the next five years, and Dubai’s approval of a public-private partnership portfolio valued at $10.9 billion,” the report said.

Growth in the Gulf is also expected to accelerate as oil output rises from October 2024, while non-oil sectors continue to expand. The GCC region is expected to see economic growth rebound to 2.8 per cent in 2024 and 4.7 per cent in 2025, with the UAE and Saudi Arabia driving this recovery. This growth is largely attributed to the forecasted increase in oil production during the second half of 2024 and a global economic recovery, as projected by the World Bank. The region’s focus on diversifying its economies highlights its strategic approach to achieving resilience and sustainable development during global volatility.