Key Economic Projections for the UAE
The UAE is experiencing a significant shift in its economic landscape, with real GDP growth showing steady acceleration. This transformation is driven by a diversified economy and increased foreign investment. Various international institutions have provided their forecasts for the country’s economic performance in 2025 and 2026.
IMF Projections: A Cautious Optimism
According to the International Monetary Fund (IMF), the UAE’s real GDP is expected to grow by 4.0% in 2025, with a slight increase to 5% in 2026. The IMF takes a cautious approach, balancing optimism about the tourism, logistics, and finance sectors against potential risks such as global interest rates and energy volatility. Their 2026 forecast suggests that the UAE will benefit from more stable oil production alongside continued gains from diversification policies.
Although not as optimistic as some domestic projections, the IMF outlook reinforces confidence in the UAE’s steady and resilient growth path. This provides a conservative baseline for investors and policymakers.
World Bank Forecast: Encouraging Growth
The World Bank anticipates a slightly higher growth rate of 4.6% in 2025, with an increase to 4.9% in 2026. Non-oil GDP is expected to expand faster than the overall economy, driven by trade agreements, infrastructure investment, and expanding service industries. The easing of OPEC+ restrictions is expected to contribute more strongly in 2026, helping hydrocarbons recover while non-oil activities remain the main growth driver.
This forecast highlights the UAE’s ability to sustain nearly 5% growth across two consecutive years, positioning the country as one of the Gulf’s most resilient and diversified economies.
Central Bank of the UAE: Most Optimistic Outlook
The Central Bank of the UAE (CBUAE) remains the most optimistic, projecting 4.9% growth in 2025 and a robust 5.3% in 2026. Its outlook reflects confidence in strong domestic demand, expanding credit markets, and the UAE’s rising role as a regional hub for finance, tourism, and logistics. Importantly, the CBUAE sees hydrocarbon GDP strengthening in 2026 as OPEC+ quotas loosen further, complementing consistent non-oil growth.
This projection reflects both cyclical recovery and structural transformation. The central bank’s higher numbers suggest the UAE is not just resilient but also gaining speed, making it one of the Gulf’s standout economies.
Factors Driving the Acceleration
Non-Oil Sectors Leading the Way
Non-oil sectors are playing a crucial role in the UAE’s growth. Tourism, aviation, logistics, construction, and finance are showing strong momentum. Reforms enabling 100% foreign ownership, new visa regimes, and free zone expansions are deepening resilience. In 2025, non-oil GDP is expected to grow at 4.5%, underpinned by investment inflows and expanding trade. By 2026, growth is projected at around 5% (4.8%), supported by advanced manufacturing, AI-driven digital services, and continued inflows of expatriates and tourists.
Oil Rebound and Fiscal Stability
Hydrocarbons, though less dominant than before, remain vital to the UAE’s fiscal health. After OPEC+ production cuts restrained output in 2023-2024, a phased rollback will boost oil GDP in 2025, with expansion around 5.8%. By 2026, as quotas loosen further, the hydrocarbon sector is forecast to contribute even more strongly, with real growth above 6.5%, especially as ADNOC expands LNG and petrochemical investments. This rebound stabilizes fiscal revenues, providing additional capital for infrastructure and diversification projects.
Diversification and Pro-Business Reforms
The government’s focus on economic diversification continues to reshape the UAE’s growth model. Initiatives such as the Net Zero 2050 strategy, technology accelerators, and new CEPA trade agreements attract long-term FDI into renewable energy, fintech, and logistics. These policies anchor non-oil GDP growth close to 5% (4.5%) in 2025, insulating the economy from oil volatility. By 2026, reforms are expected to consolidate gains, pushing total GDP growth above 5.3%.
External Demand and Regional Recovery
The UAE’s status as a global trade hub benefits from both regional and international recovery. Stronger growth in Gulf neighbors, a rebound in global air travel, and closer ties with Africa and Asia sustain trade and tourism inflows. In 2025, these dynamics are expected to lift services exports and investment flows, reinforcing 4-5% GDP growth. By 2026, as global demand strengthens further and Red Sea trade routes stabilize, the UAE’s role as a logistics and investment hub should lift growth past 5%.
Policy and Strategy Implications
The UAE should continue channeling investment into advanced manufacturing, tourism, financial services, and clean energy to reduce reliance on hydrocarbons. Maintaining momentum in technology adoption, logistics upgrades, and renewable projects will help sustain non-oil growth around 5%. Deepening trade and investment links through comprehensive Economic Partnership Agreements (CEPAs), free-zone reforms, and investor-friendly laws must be actively implemented to expand market access.
Managing cyclicality is essential, with policymakers budgeting conservatively using lower oil price assumptions and maintaining fiscal buffers. Developing skills in AI, fintech, and green technologies is crucial for sustaining productivity in non-oil sectors.
What This Means for Investors
Confidence in the non-oil economy is growing, with tourism, logistics, technology, financial services, and real estate driving the economy toward more sustainable, diversified growth. The government’s pro-business reforms make these sectors attractive. Oil still adds upside, with the UAE planning gradual increases in oil output as OPEC+ curbs ease, giving hydrocarbon GDP a lift in 2025 and 2026.
The UAE continues to position itself as one of the most business-friendly destinations globally. Real estate and financial markets are buoyed by rising demand and strong liquidity. For investors, this creates opportunities in REITs, equity markets, and direct property investment.
Bottom Line
The UAE is poised for stronger growth in 2025 and an even more robust performance in 2026. The alignment of forecasts from the IMF, World Bank, and CBUAE underscores a unique window for investors. Non-oil sectors offer core growth, hydrocarbons provide stability and additional upside, and reforms ensure lasting competitiveness. Together, these factors position the UAE as one of the most attractive emerging market destinations over the next two years.
