Enhanced Economic Outlook for the UAE in 2025 according to their Central Bank's Revised Estimation
The United Arab Emirates (UAE) is set to witness a significant economic expansion in 2026, with projections indicating a growth of 5.3%. This optimistic outlook is supported by the anticipated strong momentum in the non-hydrocarbon activities, according to recent reports.
The UAE's economy has been on a steady growth trajectory, with the first quarter of the year showing a 3.9% year-on-year growth. This growth was further underscored by the expansion of the non-oil gross domestic product (GDP) by 5.3%, contributing more than 77% of the total real GDP.
The growth in the UAE has been supported by several key sectors. The manufacturing, real estate, financial services, and construction sectors have all contributed significantly to the economy's growth. Residential sales in the real estate sector rose by 13.7% annually in the first five months of the year, with off-plan sales climbing by 14.3% and ready home transactions also seeing double-digit growth.
The UAE Central Bank has revised its 2025 growth forecast for the country's economy to 4.9%, reflecting the robust performance of these sectors. In response to the US Federal Reserve's move, the Central Bank of the UAE lowered its benchmark interest rate by 0.25 percentage points to 4.25%.
The UAE's banking sector has also performed strongly. Bank deposits increased more than 13% year-on-year in the second quarter, with lending up 11%. Asset quality also improved, with capital buffers staying well above regulatory requirements.
Inflation in the UAE has eased, with prices increasing 0.6% in the second quarter. The 2025 inflation forecast has been revised down to 1.5%. The base rate applied to the UAE Central Bank's overnight deposit facility was reduced to 4.15% from 4.40%.
The UAE's focus on enhancing its knowledge economy is evident in the National Economic Clusters Program. This initiative involves government bodies, private sector companies, and academic institutions, focusing on innovation hubs, research and development initiatives, and partnerships that promote technology transfer and skill development.
The National Policy for Economic Clusters, launched by the UAE Cabinet, aims to boost the country's GDP by more than Dh30 billion ($8 billion) a year. The policy focuses on specific clusters dedicated to financial services, tourism, space, communications and data, as well as food.
Dubai welcomed nearly 10 million international visitors in the first half of the year, marking a 6.1% annual increase. Passenger traffic through the Abu Dhabi and Dubai airports topped about 62 million combined. These figures underscore the success of the tourism sector, another key focus of the National Economic Clusters Program.
In conclusion, the UAE's economy is poised for further expansion in 2026, driven by the strong performance of various sectors and the government's focus on enhancing the knowledge economy. The country's banking sector is also performing well, with improved asset quality and strong growth in deposits and lending. The tourism sector has also seen significant growth, with Dubai welcoming nearly 10 million international visitors in the first half of the year.
Read also:
- Planned construction of enclosures within Görlitzer Park faces delays
- Controversy resurfaces following the elimination of diesel filter systems at Neckartor: A renewed conflict over the diesel restriction policy
- Foreign financial aid for German citizens residing abroad persists
- Hulk Hogan's successful transformation of his wrestling persona into a lucrative business entity
