The International Monetary Fund (IMF) has projected strong economic growth for the UAE, forecasting a 4% increase in 2025 despite reduced oil production under OPEC+ agreements. In a recent statement following its staff visit, the IMF highlighted the UAE’s focus on non-hydrocarbon sectors, which are thriving thanks to tourism, construction, and public spending. Financial services are also contributing to this positive outlook.

Capital inflows remain robust, driven by the UAE’s business-friendly reforms, which are stimulating demand in the real estate market and pushing up housing prices across various segments. Hydrocarbon GDP, while impacted by production cuts, is expected to grow above 2% this year as the UAE gradually adjusts its OPEC+ quotas. Inflation is anticipated to stay around 2% in 2025, despite rising housing and utility costs.

The IMF acknowledged that hydrocarbon revenues may decline due to fluctuating oil prices and reduced output. However, fiscal and external surpluses are expected to remain strong, with the fiscal surplus projected at 4% of GDP in 2025, down slightly from 5% last year. Non-oil revenues are set to rise steadily as the corporate income tax continues to roll out. Public debt is manageable, staying at around 30% of GDP.

According to Gulf Today, the UAE’s current account surplus is predicted to hit 7.5% of GDP, while international reserves remain healthy, covering over 8.5 months of imports. Additionally, the IMF noted that the UAE’s banks are well-capitalized and liquid, with improved asset quality and strong profitability supported by resilient credit demand and elevated interest rates.

Despite these positive trends, the IMF urged caution regarding rising housing prices, recommending close monitoring of risks in the real estate market. It also praised the UAE’s ongoing reforms for fostering medium-term growth and aiding the energy transition. Infrastructure investments, trade liberalization, and Comprehensive Economic Partnership Agreements were highlighted as key drivers of growth and foreign direct investment.

Meanwhile, during the first meeting of 2025, chaired by Abdullah Bin Touq Al Marri, Minister of Economy, the Economic Integration Committee reviewed its 2024 achievements. These included boosting economic diversification and competitiveness, with non-oil GDP growing by 4.4% in the first half of 2024 and non-oil sectors contributing 75% to the GDP by mid-year.

Bin Touq emphasized the UAE’s transition to an innovation-focused economic model, which has strengthened the business environment for investors and startups worldwide. He highlighted the Committee’s work in aligning federal and local policies with international standards to ensure sustainable growth across all sectors.