UAE's Real GDP Expected To Expand At 4.8% This Year

The UAE's real GDP growth is expected to grow at 4.8 per cent this year, following a 4.0 per cent expansion in 2024, driven by a pick-up in activity in the hydrocarbons sector, a leading financial institution said.

According to a note from Emirates NBD Research, the growth in the hydrocarbons sector is based on adjusted baseline targets and a change of strategy from Opec+, which recently raised production quotas for its members. Oil sector growth is projected at 5.0 per cent, up from just short of 1.0 per cent last year.

Emirates NBD anticipates a modest slowdown in non-oil growth to a still robust 4.7 per cent, from 5.0 per cent in 2024, with Abu Dhabi likely growing at a faster pace than Dubai once again.“Transport and storage, construction, and financial services are likely to remain key growth drivers across the emirates. In 2026 we forecast GDP growth of 4.6 per cent,” Daniel Richards, Senior Economist at Emirates NBD, said.

The UAE's current account surplus is expected equivalent to 8.1 per cent of GDP, down from 9.1 per cent last year.“The modest fall is on the back of lower oil prices which we forecast at an average $68 per barrel in 2025, from $80 in 2024. As a result, we expect a pick-up in the current account balance to 9.0 per cent of GDP in 2026 as both oil production and global oil prices are likely to be higher,” Richards said.

The UAE's fiscal surplus is expected to decline to 1.8 per cent of GDP in the UAE this year, down from 3.4 per cent in 2024, as lower oil prices constrain revenue. This will be the fifth straight year of surplus: since 2017 there has only been a deficit in 2020, in the midst of the Covid-19 pandemic. In Dubai, the government committed to an expansionary budget of Dh86.3 billion in 2025, marking a nine per cent expansion on the Dh79.1 bilion that was allocated for 2024, with the government projecting a surplus equivalent to 4 per cent of GDP.

"The UAE is a highly open economy and trade is a major growth driver. Any drop off in global trade volumes will be a headwind for the UAE economy though it has taken steps to insulate itself through signing CEPAs with multiple trading partners. Domestic project spending will also be a big part of the growth story going forward and that will help to limit any negative impact of global trade disruptions," said Edward Bell, Acting Chief Economist & Head of Research, Emirates NBD.

Dubai's monthly CPI inflation is expected to average around 2.5 per cent year on year this year, which would mark the slowest pace of price growth since 2021.“Annual inflation over the first five months of the year has averaged 2.8 per cent, moderately higher than our full-year forecast. However, most components of the basket continue to show only moderate price growth and we anticipate that inflation should be maintained around current levels through the rest of the year, a slowdown from the 3.2 per cent pace seen at the start of 2025,” Richards said.

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