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UAE to lead GCC region in GDP growth in 2024, 2025

The UAE remains the main regional destination of FDI inflows, attracting about $30 billion in 2023

Published: Sun 1 Dec 2024, 10:26 AM

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The UAE will continue to lead the GCC region in economic growth in 2024 and 2025, driven by non-oil sectors and foreign direct investments, according to a global think-tank.

A study released by the Institution of International Finance (IIF) projected that the UAE economy will grow 4.0 per cent in 2024 and 5.1 per cent in 2025, the highest among all GCC countries. In 2023, the Emirates' GDP grew by 3.6 per cent, the fastest among Gulf countries.

The country's non-oil GDP growth will moderate in 2024 and 2025 following a growth of 6.2 per cent in 2023, but will remain the fastest in the region.

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Garbis Iradian, chief economist for Mena and Central Asia at IIF, said the UAE’s current macroeconomic performance and near-term outlook remain favourable with risks well-contained.

Real GDP growth of GCC countries (%) Source: IIF
Country 20242025
UAE4.05.1
Saudi Arabia1.14.8
Bahrain2.93.4
Oman1.92.6
Qatar 0.91.4
Kuwait-2.2 2.9

“The economy will continue to enjoy robust growth in 2024 and 2025 of around 4 per cent, supported by continued strong domestic demand. Dubai’s strong growth continues to be driven by tourism and hospitability. The inflation rate will decline further to 2 per cent in 2025, supported by lower global commodity prices and manufacturing unit value,” Iradian said in a note on the regional economies.

IIF projected that the UAE continues to pursue a modest expansionary fiscal policy stance, given its large financial buffers and spare capacity.

“The continued improvement in non-oil government revenues, combined with an increase in volume of oil exports, will help to lower the fiscal breakeven oil price to below $65 a barrel in 2025. The general government debt-to-GDP ratio continued its decline to 16 per cent of GDP in 2024,” said Iradian.

The UAE has set clear goals for encouraging diversified and knowledge-based growth to achieve a competitive knowledge-driven economy. It is implementing a broad range of policies to achieve its goals. Such reforms will increase productivity growth and boost the supply of highly qualified labour, which would raise potential growth.

The UAE remains the main regional destination of FDI inflows, attracting about $30 billion in 2023 – accounting for 6% per cent of GDP, the highest among emerging economies.

“The friendly business environment, excellent infrastructure, and diversified economy by regional standards have supported the elevated FDI. The bolstered UAE appeal to international investors can be attributed to a confluence of strategic reforms, including the allowance of 100 per cent foreign ownership in specific sectors, enhanced intellectual property protections, and streamlined licensing procedures,” said Iradian.

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