Economic outlook 2025-2026
Following robust growth of 3.6 percent in 2023 and second-quarter performance of 3.9 percent in 2024, the Central Bank of the UAE (CBUAE) reported that real GDP growth is projected to accelerate to 4.5 percent and 5.5 percent in 2025 and 2026, respectively. This growth trajectory is driven by strategic government initiatives and favorable performance across key sectors such as tourism, transportation, financial services, construction, and communication.
Non-oil economic activities are at the forefront of the UAE's development strategy, with non-oil GDP growth estimated at 5.0 percent in 2025. Key drivers include manufacturing, trade, and transportation, all benefiting from the government’s proactive efforts to attract foreign direct investment (FDI) and implement comprehensive economic partnership agreements (CEPAs). In the first half of 2024, non-oil GDP accounted for 75 percent of the UAE’s total GDP, reflecting the success of these initiatives in reducing dependence on oil revenues. Among the fastest-growing non-oil sectors were transportation and storage, which grew by 8.4 percent, followed by financial and insurance activities at 7.6 percent, and construction at 7.3 percent.
The oil sector, though secondary to non-oil activities, maintained steady production levels, averaging 2.9 million barrels per day in 2024, with growth projected to accelerate to 2.9 percent in 2025. Meanwhile, the UAE’s fiscal performance demonstrated resilience, with government revenue rising by 6.9 percent year-on-year to AED 263.9 billion in the first half of 2024. The fiscal surplus increased by 38.8 percent compared to the previous year, reflecting sound economic management and the ability to fund large-scale infrastructure projects.
Sustained business confidence, as evidenced by the UAE’s Purchasing Managers’ Index (PMI) of 54.1 in October 2024, and record tourism figures further reinforce the country’s economic outlook. With the implementation of the "We the UAE 2031" vision and ongoing efforts to strengthen global trade and investment partnerships, the UAE is well-positioned to achieve its long-term goals, including raising its GDP to AED 3 trillion by the next decade.
UAE's Gross Domestic Product
The UAE's economy demonstrated remarkable growth in 2023, with GDP reaching AED 1.68 trillion at constant prices, representing a 3.6 percent increase from 2022. Significantly, the non-oil sector contributed 74.3 percent to the total GDP, reaching AED 1.25 trillion (USD 340.3 billion) and growing by 6.2 percent compared to the previous year. This performance has positioned the UAE as the fifth-largest economy globally in terms of real GDP growth.
The financial sector led the economic growth with a 14.3 percent increase, followed by transport and storage at 11.5 percent, driven by increased international visitors which reached 31.5 million. The construction sector achieved its highest growth in a decade at 8.9 percent, while real estate and hospitality sectors also showed strong performance with 5.9 percent and 5.5 percent growth respectively.
These achievements align with the 'We the UAE 2031' vision, which aims to boost the country's GDP to AED 3 trillion (USD 816.8 billion) within the next decade. The UAE has further strengthened its global economic position, ranking among the top 10 countries in various competitiveness indicators, including sixth place in GDP per capita (PPP) according to the IMD World Competitiveness Yearbook 2023, and sixth globally in the GNI Index in the UNDP Human Development Index Report 2024.
Foreign Direct Investment trends
In terms of foreign direct investment (FDI), the UAE has emerged as a dominant force in the Arab world, capturing 45.4 percent of total FDI flows into Arab states with AED 248.3 billion (USD 67.6 billion) in 2023. According to UNCTAD's World Investment Report 2024, the UAE experienced a remarkable 35 percent increase in FDI inflows, reaching AED 112.6 billion (USD 30.6 billion), and ranked second globally after the United States in greenfield FDI project announcements with 1,323 new projects. This success is attributed to the country's flexible policies and recent legislative amendments, particularly to the Commercial Companies Law, which now allows 100 percent foreign ownership in many sectors.
The UAE's investment landscape is structured between offshore jurisdictions (including DIFC and ADGM) and onshore UAE, with varying regulations for foreign ownership. The country has identified several promising sectors for foreign investment, including:
- Fintech;
- Healthcare;
- Renewable energy;
- Manufacturing; and,
- Creative industries, among others.
Through initiatives like NextGenFDI, the UAE facilitates expedited licensing for technology companies, while maintaining strategic oversight of sensitive sectors through Cabinet Decision No.55/2021.
Trade trends
The UAE has set a record in its non-oil foreign trade during the first half of 2024, reaching AED 1.4 trillion (US$381.17 billion), marking an 11.2 percent increase from the previous year. This achievement aligns with the country's ambitious target of reaching AED 3 trillion in non-oil foreign trade by the end of 2024, and AED 4 trillion by 2031, as announced by Sheikh Mohammed bin Rashid Al Maktoum, the Vice President and Prime Minister of the United Arab Emirates and Ruler of Dubai.
The country's trade relationships have shown significant growth across various partners. Trade with Iraq, which has become the UAE's top export destination, grew by 41 percent, while trade with India and Turkey increased by 10 percent and 15 percent respectively. The UAE's export portfolio has diversified substantially, with key categories including gold, jewellery, cigarettes, oils, aluminium, and copper wires collectively growing by 36.8 percent year-on-year. Non-oil exports to the top 10 trade partners surged by 28.7 percent, demonstrating the broad-based nature of the UAE's trade expansion.
Re-exports continue to play a crucial role in the UAE's trade strategy, reaching AED 345.1 billion in H1 2024, a 2.7 percent year-on-year increase. Kazakhstan has emerged as a significant re-export partner, particularly in telephone devices, while traditional partners like Saudi Arabia, Iraq, India, the US, Kuwait, and Qatar maintain strong trade relationships. Meanwhile, non-oil imports reached AED 800 billion, showing an 11.3 percent year-on-year increase, with imports from the top 10 markets growing by 7.2 percent and accounting for 48.7 percent of total imports.
