IMF Projects UAE's Economic Growth to Stay Strong at 4% in 2025

The International Monetary Fund (IMF) has projected that the UAE's near-term economic growth will remain robust at approximately 4% in 2025, despite the impact of OPEC+ agreements on oil production.

This outlook was revealed following an IMF staff visit to the UAE to discuss economic developments, policy priorities, and reforms.

The statement highlighted that the UAE’s non-hydrocarbon sectors, including tourism, construction, and financial services, are driving economic growth. Capital inflows, spurred by business-friendly reforms, continue to boost real estate demand and house prices. Meanwhile, hydrocarbon GDP is expected to grow by over 2% in 2024, supported by OPEC+ production cuts and a gradual quota increase. Inflation is forecasted to remain controlled at 2% in 2025, despite rising housing and utility costs.

Fiscal and external surpluses are projected to remain stable, even with declining hydrocarbon revenues due to volatile oil prices. The fiscal surplus is estimated to moderate to 4% of GDP in 2025, down from 5% in 2024. However, non-hydrocarbon revenue is expected to rise steadily with the ongoing implementation of corporate income tax. Public debt remains manageable at around 30% of GDP, while the current account surplus is projected at 7.5% of GDP, supported by strong international reserves.

The UAE banking sector is forecasted to maintain healthy capitalization and liquidity, with asset quality improving in 2024. Exposure to real estate has declined, but risks from rising house prices will need continued monitoring.

The IMF commended the UAE’s reform efforts, emphasizing the importance of infrastructure investments, trade liberalization through Comprehensive Economic Partnership Agreements, and fiscal frameworks to ensure sustainable growth and energy transition. Enhanced economic data collection and dissemination were also encouraged to strengthen future initiatives.

News Source: Emirates News Agency