Trade And Tourism Are Likely To Be The Key Drivers Of The UAE's Growth Story

The UAE Economy is expected to grow at 4.8 per cent this year, a report showed on Tuesday.

According to the latest ICAEW Economic Insight report prepared by Oxford Economics, trade and tourism are likely to be the key drivers of the UAE's growth story.“We remain confident the tourism industry – the fastest-growing sector across the region in 2024 – will remain a vital engine for growth and diversification efforts. Trade will also continue to be a key growth driver, especially in the UAE, which has recently broadened market access and fostered collaboration through several more comprehensive economic partnership agreements. The UAE's foreign trade reached a milestone in 2024, surpassing Dh3 trillion for the first time,” the report said.

Increased oil production quotas from the Organisation of Petroleum Exporting Countries and its allies, colelctively known as Opec+, are also expected to boost the economy.“The UAE will benefit from a higher production quota of 3.5 million bpd, supporting oil sector growth of 4.8 per cent. We think growth in the GCC oil sectors will pick up more strongly in 2026 as countries continue to raise supply,” the report said.

According to S&P Global Ratings, the oil sector will support the UAE's growth in 2025 and 2026. Total growth (oil and non-oil) is expected at 5.0 per cent in 2025 and 4.9 per cent in 2026, the ratings agency said on Tuesday.

Average consumer price inflation is likely remain to stable at 1.9 per cent in 2025.“Pausing monetary policy is balancing strong domestic demand. Momentum will likely be retained in 2025 as demand for services - tourism, trade and finance - remains strong,” S&P analysts wrote.

Despite the uncertain global outlook, the report forecasts GCC economies to grow by 4 per cent, up from an estimated 1.8 per cent in 2024. The economy of the wider Middle East is expected to grow at 3.3 per cent in 2025.

While US President Donald Trump's tariff policies have created uncertainty over external demand, the GCC remains largely sheltered from direct tariff impacts, the report noted.“The region's non-energy sectors are projected to grow by 4.4 per cent this year, up from an estimated 3.9 per cent in 2024, with regional PMI data firmly in expansionary territory,” the report said.

Saudi Arabia's, oil output is expected to reach 9.3 million barrels per day, driving oil sector growth of 1.9 per cent, while its GDP is expected to expand by 5.8 per cent.

Oil prices have fallen sharply in recent weeks due to tariff threats and increased Opec+ supply, with prices forecast to average $70.5 per barrel this year, down from $80.5 in 2024.

Saudi Arabia and the UAE are expected to lead non-oil sector growth with 5.8 per cent and 4.8 per cent respectively. Tourism – the fastest-growing sector across the region in 2024 – will remain a vital engine for growth, with Saudi Arabia expecting continued expansion supported by the GCC-wide visa.

Hanadi Khalife, head of Middle East, ICAEW, said:“The business landscape across the GCC continues to demonstrate resilience and adaptability in the face of global economic uncertainty. We're seeing strong investment in key sectors like tourism and infrastructure, which are creating new opportunities for growth.”

Scott Livermore, ICAEW economic adviser and chief economist and managing director, Oxford Economics Middle East, said:“The GCC's projected 4 per cent growth in 2025 highlights the region's ability to withstand external pressures while advancing its diversification efforts. Despite softer oil prices, the gradual easing of OPEC+ production cuts will support energy sector growth after two years of contraction.”

Qatar's GDP is forecast to expand by 2.1 per cent this year, with growth expected to more than double in 2026 as additional LNG capacity comes online. The non-energy economy is projected to grow by 2.9 per cent this year, remaining the primary growth engine.

Tourism has provided significant support to Qatar's non-energy growth, with overnight arrivals reaching 5 million by end-2024, a 23 per cent increase on 2023. The launch of the pan-GCC visa, is expected to push visitor numbers to 5.3 million in 2025.

The fiscal surplus is forecast at 27.3 billion Qatari riyals (3.3 per cent of GDP) in 2025, significantly better than the deficit of 13.2 billion riyals pencilled into this year's budget.

Bahrain's economy is set to double its growth rate to 2.8 per cent this year, with the non-oil economy expanding by 3.1 per cent. The oil sector, after contracting by an estimated 2.4 per cent in 2024, is expected to see a modest 0.9 per cent recovery.

As part of its diversification efforts, Bahrain is establishing new industrial free zones and developing tourism infrastructure, including a $427 million waterfront project. However, persistent budget deficits and a rising debt burden above 100 per cent of GDP pose downside risks to growth.

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