World Bank Forecasts UAE Economy Growth of 4% in 2025, Faster than Last Year

According to the World Bank's most recent assessment, the UAE economy would rise by a robust 4% in 2025 and 2026, which is greater than it was the previous year.

The UAE is expected to increase by 4.0% in 2025, which is 0.1 percent less than what the World Bank predicted in June 2024.

However, the UAE's 2025 growth forecast is greater than the 3.3% growth forecast from the previous year, which was lowered by 0.6% in its most recent Global Economic Prospects report.

According to the international organization, the economy of the United Arab Emirates will continue to develop at the quickest rate in the Gulf area by 2025, surpassing that of Saudi Arabia (3.4%), Bahrain (3.3%), Qatar (2.7%), Oman (2.4%), and Kuwait (1.7%).

The UAE now has the third fastest growing economy in the GCC, behind Saudi Arabia (5.4%) and Qatar (5.5%), after the World Bank increased its 2026 growth prediction by 0.1% to 4.1%.

At the regional level, it reduced the Gulf Cooperation Council's (GCC) growth estimate for 2025 by 1.4% to 3.3%, but increased it by 1.1% for the following year to 4.6%.

Growth in the GCC is predicted to have increased to 1.6% in 2024, mostly due to stable labor markets, a rebound in capital inflows, and strong non-oil activities.

In order to maintain activity over the forecast horizon, it stated that monetary easing in GCC nations is expected to continue in line with anticipated monetary policy easing in the US and favorable financial circumstances.

Due mostly to the steady increase in oil production, growth in the Middle East and North Africa (Mena) is predicted to ramp up to 3.4% in 2025 and 4.1% in 2026.

Due primarily to the extension of part of the voluntary oil production cuts by Opec+ members, which were initially anticipated to be lifted at the end of 2024 in the June predictions, the outlook for 2025 has been reduced by 0.8 percentage points.

However, considering the ongoing fighting in the area, the outlook is particularly uncertain.

Additionally, the International Monetary Fund (IMF) reduced its forecast for Mena growth in 2025 by 0.5% to 3.5% and in 2026 by 0.3% to 3.9%.

According to the IMF, energy commodity prices are predicted to drop 2.6% in 2025, which is higher than what was predicted in October. Increases in gas costs due to colder-than-expected weather and supply disruptions, such as the current Middle East conflict, partially offset the fall in oil prices caused by poor Chinese demand and strong supply from non-Opec+ nations.