The International Monetary Fund’s recent World Economic Outlook highlights a significant upward adjustment in the UAE’s growth forecast, reflecting the country’s solid position amid global uncertainties.
The IMF now predicts the UAE’s real GDP will grow by 4.8% in 2025, up from its April estimate, with a further increase to 5.0% in 2026, maintaining its earlier forecast.
This positive outlook contrasts with slowing global growth. The WEO expects global growth to decline from 3.3% in 2024 to 3.2% in 2025, and further to 3.1% by 2026. Growth in developed countries is anticipated to be around 1.5%, while emerging markets are expected to stay just above 4%.
In the Middle East and Central Asia, growth is projected to rise from 2.6% in 2024 to 3.5% in 2025 and 3.8% in 2026, with a half-point increase in the 2025 forecast.
The UAE’s resilience amidst geopolitical tensions and oil price fluctuations is emphasized in the report. Said Bakhache, head of the IMF’s Article IV mission to the UAE, notes the country’s diversified economy and strong buffers as key strengths against external shocks.
The upward revision is attributed to a wider current account surplus in 2024, driven by stronger non-hydrocarbon exports and slower import growth. Expanding trade agreements with India, Indonesia, Türkiye, and South Korea are anticipated to enhance integration and resilience, further reducing reliance on fossil fuels.
Financially, UAE banks are described as well-capitalized, liquid, and profitable, with declining non-performing loans and conservative loan-to-value thresholds. The introduction of a countercyclical capital buffer and advancements in liquidity management, including the Dirham Monetary Framework, Digital Dirham, and stablecoin regulation, are seen as steps toward financial modernization.
In real estate, spurred by population growth, foreign interest, and the UAE’s safe haven status, the market remains dynamic. Low banking exposure to real estate and substantial self-financing mitigate systemic risk, though changes in capital flows or sentiment shifts require close monitoring.
Structural reforms are also recognized, with investments in infrastructure, innovation, sustainability, and AI positioning the UAE as a forward-thinking economic hub. The Fund praises the UAE’s progress in climate adaptation, water and food security, and its removal from the Financial Action Task Force’s monitoring list due to stronger anti-money-laundering measures.
Post-2026, the factors supporting UAE growth are expected to persist: sound fiscal policy, ample buffers, a progressive regulatory regime, and a proactive reform agenda. If global uncertainties diminish and trade expands, the UAE may continue to lead regional growth into the next decade, although risks remain.
