The UAE economy is forecasted to expand from 3.7% in 2024 to 4.5% in 2025, according to the latest ICAEW Economic Insight report by Oxford Economics. While the non-energy sector is expected to see slight moderation, with growth dipping from 4.5% to 4.3% due to capacity constraints, the UAE continues to thrive as a hub for investment and innovation. Its $16 billion in greenfield foreign direct investment (FDI) underscores its global leadership in FDI relative to GDP. Tourism remains a key growth driver, with Dubai recording a 6.3% year-on-year rise in visitor numbers during the first nine months of 2024.
GCC Economies to Double Growth Rate in 2025
The Gulf Cooperation Council (GCC) economies are set to see their growth rate more than double, rising from 1.9% in 2024 to 4% in 2025. This is despite the extension of OPEC+ oil production cuts. The region is poised to significantly outpace global GDP growth, which is projected to edge up slightly from 2.7% in 2024 to 2.8% in 2025.
The energy sector within the GCC is expected to rebound strongly in 2025, achieving a growth rate of 4.2% as oil production cuts gradually unwind. Non-energy sectors will sustain their momentum, growing around 4% in both 2024 and 2025. Key indicators of economic activity, such as regional Purchasing Managers’ Indices (PMIs), remain robust. For instance, Saudi Arabia’s PMI recently hit a six-month high of 56.9, reflecting strong business confidence and domestic activity.
Saudi Arabia Leads Non-Energy Growth
Saudi Arabia’s economic growth is anticipated to accelerate from 1.4% in 2024 to 4.4% in 2025, driven by a robust 5.8% expansion in the non-energy sector. The kingdom’s GDP saw a year-on-year growth of 2.8% in Q3 2024, reversing four consecutive quarters of decline. This recovery is supported by an ambitious $800 billion tourism investment program over the next decade and major events such as Expo 2030 and FIFA World Cup 2034.
UAE and GCC Showcase Fiscal Strength
Despite challenges posed by lower oil revenues, the GCC countries maintain fiscal resilience, with Qatar and the UAE standing out for their strong budget surpluses. The UAE’s budget surplus is projected at 4.1% in 2025, highlighting its sound fiscal management. Saudi Arabia, while expecting budget deficits, benefits from low government debt, enabling it to pursue strategic investments.
Inflation and Monetary Policy in Focus
Inflation across the GCC is forecasted to rise moderately from 1.8% in 2024 to 2.3% in 2025, remaining well-controlled. Recent interest rate cuts by the US Federal Reserve—totaling 75 basis points in September and November 2024—have been mirrored by GCC central banks. These adjustments are expected to stimulate real estate and private-sector investment further.
Opportunities Amid Challenges
Hanadi Khalife, Head of the Middle East at ICAEW, noted, “The GCC business landscape continues to evolve, creating opportunities for growth and innovation. Chartered accountants play a critical role in helping organizations adapt to this dynamic environment and implement sustainable business practices.”
Scott Livermore, ICAEW economic adviser and Chief Economist at Oxford Economics Middle East, added, “The GCC’s projected 4% growth in 2025 underscores the success of its diversification efforts. However, managing capacity constraints in high-growth sectors such as tourism, real estate, and finance will be essential to sustaining long-term economic stability.”
As the GCC strengthens its economic diversification and resilience, it remains a key player in the global economy, leveraging growth in tourism, real estate, and financial sectors to build a sustainable future.