JEDDAH: Despite ongoing regional challenges, the UAE is expected to maintain strong economic resilience in 2025, fueled by robust consumer spending, record-breaking foreign direct investment, and successful diversification efforts, according to a new industry report.
The UAE’s strategic position as a global trade hub connecting Europe, Africa, and Asia, along with its status as a prime real estate destination, continues to drive its growth trajectory.
The report, from FOREX.com, a subsidiary of StoneX Group Inc., a global US-based financial services firm, emphasizes that these factors will help sustain the country’s economic momentum.
One key indicator of this resilience is the UAE’s thriving real estate market. In October, the country saw a record 19,390 residential transactions, bringing the year-to-date total to 140,000 units — an increase of 36 percent compared to the previous year.
“The UAE is on track to maintain robust economic growth in 2025, with GDP growth forecasts ranging from 6.2 percent by the Central Bank of the UAE, 5.1 percent by the International Monetary Fund, and 4.1 percent by the World Bank,” said Razan Hilal, market analyst and chartered market technician at FOREX.com.
Hilal further noted that inflation in the UAE has been steadily decreasing, dropping to 2.4 percent year on year in October, the slowest pace since August 2023.
“With the Federal Reserve’s ongoing monetary easing, mirrored by the Central Bank of the UAE, interest rates are expected to decline further, which should help stimulate economic growth in 2025,” she added.
While the outlook remains positive, the report does acknowledge potential risks stemming from local, regional, and global factors. These include pressures on oil revenues due to falling oil prices, challenges from oversupply risks from non-OPEC countries, and the economic slowdown in China.
On the global stage, China’s anticipated shift to a more accommodative monetary policy in 2025 — the first such move since 2011 — could stabilize demand.
Meanwhile, the UAE’s non-oil sectors, aligned with the country’s ambitious D33 Agenda, are expected to continue driving economic expansion. These sectors include trade, tourism, and technology, with the UAE aiming for foreign trade worth 25.6 trillion dirhams ($6.97 trillion) and FDI inflows of 60 billion dirhams annually by 2033.
Hilal also highlighted that Dubai’s role as a global innovation hub will be further reinforced by initiatives like the 2030 artificial intelligence and sustainable development strategies, along with the launch of “Sandbox Dubai,” which aims to foster the testing and commercialization of new technologies. These efforts will strengthen Dubai’s leadership in technological advancements and further fuel the UAE’s economic growth.
The report also touched on the potential impact of a future US presidential term under Donald Trump, predicting that fiscal spending, tax cuts, a stronger US dollar, and rising geopolitical uncertainties could have mixed effects. While US stock indices have reached record highs in anticipation of Trump’s policies, the UAE’s MSCI index is also nearing its 2024 peaks.
However, these market gains remain vulnerable to volatility, particularly given the increasing geopolitical tensions and potential disruptions in global trade caused by Trump’s policies, tariffs, and regional decisions.
Furthermore, gold prices are expected to remain crucial in 2025, with potential gains reflecting heightened demand for safe haven assets amid global uncertainties.
This presents a challenge for the UAE, which must navigate these global economic and political risks while maintaining its status as a regional safe haven.
In conclusion, the report emphasizes that staying attuned to global political and economic developments will be vital for shaping an accurate perspective on the UAE's financial performance in the years ahead.
