The UAE Economic Outlook: Signs of Strength Amid Global Economic Uncertainty

Introduction:

Despite the gloomy forecasts for global economic growth issued by many international organizations and institutions, such as the World Bank and the Organization for Economic Cooperation and Development, the UAE economy continues to demonstrate greater resilience than its global peers.

The UAE economy is driven by strong domestic activity and structural transformation, in addition to accelerating economic diversification to enhance resilience and reduce financial risks. The non-oil sector is witnessing significant expansion, supported by strategic foreign investment, alongside significant activity in the financial services, transportation, construction, and real estate sectors.

UAE Economic Outlook 2025

First: UAE economic growth prospects

The UAE has maintained strong economic growth in 2024, recording 3.9% year-on-year, compared to 3.3% achieved by the global economy last year, according to estimates by the OECD and the World Bank.

The UAE economy is expected to grow by 4.6% in 2025, supported by business climate reforms, infrastructure investments, and governance improvements that will further support economic diversification and competitiveness.

The resilience of the UAE's economy contrasts with that of advanced economies such as the United States and large parts of Europe and has also exceeded the expectations of the G20 economy. The Organization for Economic Co-operation and Development (OECD) has indicated pessimistic forecasts regarding a decline in economic growth in many developed countries, as shown in the table below:

The previous table demonstrates the resilience of the UAE economy, thanks to its economic diversification and strong financial reserves, which keep it insulated from global economic headwinds.

Second: The UAE's financial markets

The UAE's financial markets have demonstrated significant resilience compared to their global counterparts during the recent fluctuations caused by US tariffs.

The Dubai index has grown by more than 8% since the beginning of 2025, while the Abu Dhabi index has grown by 5%. These rates outperformed the best US economic indicators, when the Nasdaq index grew by 4.22%.

Third: Global Trade and UAE Economy Concerns:

Many estimates indicate that global trade growth may slow to 1.7%, with expectations of a recession in the UAE and European economies. This would spread recessionary pressures to other regions, such as the Gulf. However, the Gulf's economic diversification, away from the oil sector, will make the Gulf economy in general and the UAE economy in particular less affected.

Fourth: UAE-US Economic Partnership:

Recent agreements between the United States and the United Arab Emirates have strengthened the UAE's economic prospects. Trade agreements exceeding $200 billion were signed, with a broader investment commitment of $1.4 trillion over the next decade.

The new partnership focuses on advanced and vital sectors, such as artificial intelligence, advanced technologies, and semiconductors, with an agreement to develop an AI data center that is set to be the largest outside the United States.

Conclusion:

As a result, the UAE economy is performing resiliently despite the difficult economic and trade conditions facing the world due to tariffs.

This performance may be further strengthened by the UAE's focus on developing several vital sectors and supporting infrastructure in various fields, which will enhance the UAE's leading position regionally and internationally.

Indeed, if a mutually satisfactory solution is reached regarding the customs duties issue, this could have an even more positive impact on the UAE economy.