A strategic trade focus on Asia and a robust non-oil sector are expected to shield the UAE from the worst of recessions in the US, EU, and China, leading to stronger growth than its regional peers.
DUBAI – The UAE’s economy is better positioned than many in the region to withstand a global economic slowdown, with the World Bank projecting a significant growth acceleration to 4.8% in 2025, according to its latest regional report.
The report highlights that the UAE’s “smaller” exposure to struggling major economies like the US, EU, and China, combined with its strong trade ties with other Asian nations, acts as a critical buffer.
“The impact is smaller in the UAE, which, despite having substantial manufacturing exports, trades less with the US, China, and the EU and more with Asia – excluding China,” the World Bank stated. This contrasts sharply with regional economies like Tunisia and Morocco, which are more vulnerable to a European downturn.
Broad-Based Growth Fuels Optimism
The 2025 growth forecast for the UAE is 0.9% higher than the projected rate for 2024. The Bank attributes this resilient growth to broad-based economic activity, with significant contributions from key non-oil sectors including financial services, construction, transport, and real estate.
This positive outlook extends across the Gulf Cooperation Council (GCC), where growth is expected to accelerate to 3.5% in 2025. This uptick reflects both robust non-oil sector performance and an anticipated increase in oil production as OPEC+ gradually unwinds its cuts.
A Regional Divergence
The UAE and GCC’s forecast presents a stark contrast to other developing oil exporters in the region, such as Algeria, Iran, Iraq, and Libya. The World Bank projects growth for this group to slow dramatically to just 0.5% in 2025.
The World Bank’s bullish 4.8% growth projection for the UAE aligns with the latest forecast from the International Monetary Fund (IMF), underscoring a strong consensus among international financial institutions on the nation’s stable and positive economic trajectory.
United Arab Emirates Dirham Exchange Rate
