TLDR:
• UAE economy to grow by 5.1%
• Growth driven by diverse sectors
• Structural reforms boost UAE’s outlook
ABU DHABI (The Thursday Times) — The UAE’s economy is forecasted to grow by 5.1% in 2025, according to the latest World Economic Outlook (WEO) report by the International Monetary Fund (IMF). The growth is driven by broad-based activity in sectors such as tourism, construction, and financial services, reflecting the UAE’s robust and diversified economic trajectory.
The IMF highlighted that the UAE’s shift towards non-oil sectors, with over 70% of GDP now coming from non-hydrocarbon industries, is key to this expansion. In addition to the strength of domestic sectors, increased public and private investments and reforms in technology and renewable energy are supporting the nation’s forward momentum.
Non-oil sectors lead economic growth
As the UAE continues its ambitious push to diversify away from oil, non-oil sectors like tourism, financial services, and construction are playing an increasingly vital role in the country’s economic landscape. This has been a long-term strategy of the UAE, designed to reduce dependence on volatile oil markets. According to the IMF, the country’s non-oil GDP now accounts for the majority of its total economic output.
Public and private sector investment is contributing to the nation’s strong economic foundations, and the development of key industries such as renewable energy is positioning the UAE as a leader in the global energy transition.
Impact of structural reforms
In addition to the boost from non-oil industries, the IMF report emphasises the importance of structural reforms in driving the UAE’s economic growth. These reforms include policies aimed at supporting private sector development, improving governance, and fostering green growth through sustainable energy initiatives. The UAE has also invested heavily in technology, further boosting its economic diversification.
Higher hydrocarbon GDP growth, driven in part by an increase in crude oil production under OPEC+, is expected to complement these broader reforms, further strengthening the overall economy in 2025.
Broader regional context
While the UAE’s growth outlook remains positive, the IMF has downgraded growth forecasts for other regional economies. In particular, Saudi Arabia’s GDP growth is now expected to be 1.5% in 2024, reflecting the extension of oil production cuts and ongoing geopolitical tensions. Despite these challenges, the broader Middle East region is projected to grow at 2.4% in 2024 and 3.9% in 2025, according to the IMF’s WEO report.
The UAE, by contrast, continues to shine as one of the region’s most resilient economies, demonstrating how effective policy, investment, and diversification strategies can result in sustained growth.
