The overall growth trajectory of the UAE economy is expected to continue its upward trend, with the Central Bank of the UAE (CBUAE) forecasting 4.4 per cent growth in 2025 and a stronger rise to 5.4 per cent in 2026.
Unveiling its 2024 Financial Stability Report, the apex bank portrayed a buoyant financial system and projected reassuring economic growth for the years ahead. The optimistic outlook is reinforced by independent forecasts from the International Monetary Fund (IMF) and the World Bank, offering further validation of the UAE’s stability and resilience.
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CBUAE’s report highlights that real GDP grew by four per cent in 2024. Non‑hydrocarbon sectors led the charge, expanding by around five per cent, while the hydrocarbon sector rebounded modestly by one per cent.
Independent institutions echo this confidence. The IMF projects real GDP growth of roughly four per cent in 2025, increasing to five per cent in 2026. The World Bank has revised its estimates upward, now forecasting UAE GDP growth of 4.6 per cent in 2025 and 4.9 per cent in both 2026 and 2027, with the non‑oil economy expected to expand by 4.9 per cent in 2025. Meanwhile, the World Bank projects GCC-wide growth of 3.2 per cent in 2025, rising to 4.5 per cent in 2026.
CBUAE Governor Khaled Mohamed Balama emphasised that prudent policies, robust fundamentals, and proactive regulatory frameworks have helped insulate the UAE from growing global risk and support sustained momentum. This aligns with national strategies and global leadership aspirations, as the financial system evolves to support long-term economic vision and growth .
Growth drivers in 2025–26 are expected to include both oil and non‑oil sectors. Hydrocarbon-related GDP is forecast to grow by 4.1 per cent in 2025 and surge by 8.1 per cent in 2026 amid easing Opec+ production quotas. Non‑hydrocarbon activity is likely to sustain a 4.5 per cent growth rate over both years, backed by public investment, diversification strategies, and private-sector dynamism.
International observers highlight the UAE’s capacity to maintain stronger-than-average growth compared to its regional peers. As the IMF notes, GCC growth is projected at 3 per cent in 2025 and 4.1 per cent in 2026, while non‑oil exporters in Mena continue to face slower prospects amid global uncertainty. The World Bank stresses that careful public spending in infrastructure, education, and green energy is key to translating growth into resilience across the region.
According to economists, in practical terms, the outlook suggests that the UAE will remain a magnet for investment and capital inflows, supported by surpluses, moderate inflation, and stable sovereign buffers. The World Bank anticipates the current account surplus standing at around 6.2 per cent of GDP in 2025, rising further to 6.4 per cent in 2026. Job creation is expected to remain healthy as well, with employment growth projected at 3.3 per cent in 2025 and an unemployment rate holding at around 2.1 per cent.
In sum, CBUAE’s 2024 Financial Stability Report, supported by independent global institutions, presents a compelling picture of a UAE economy underpinned by safeguarding regulations, innovation, and prudent fiscal management. “With diversified growth engines firing across oil, finance, tourism, and logistics, enhanced oversight structures, and digital transformation marking progress, the outlook through 2025 and 2026 is decidedly optimistic,” says Sunil Ambalavelil, a leading financial and legal consultant.
“The UAE appears well positioned to deliver sustained stability, moderate but steady expansion, and resilience even against a shifting global economic backdrop,” Ambalavelil added.
These forecasts provide robust endorsement of the CBUAE’s internal projections and reflect international confidence in the UAE’s economic strategy—particularly its diversification and reform agenda.
CBUAE emphasises that the stability of the financial system is underpinned by strong capital and liquidity buffers, improved asset quality, and effective macro‑prudential regulations. The introduction of the UAE Financial Stability Council in 2024 has enhanced coordination among key stakeholders, facilitating faster responses to systemic risks and improving oversight. Stress tests commissioned by CBUAE confirmed banks’ ability to withstand adverse scenarios while continuing to extend credit and maintaining sufficient capital above regulatory minimal.
The report also notes resilience among non‑bank financial institutions. The insurance sector saw written premiums rise 21.4 per cent in 2024, reaching Dh64.8 billion, while finance companies and money exchanges maintained healthy capital and liquidity positions. Digital innovation accelerated in 2024 with expanded FinTech adoption and rollouts like the Domestic Card Scheme “Jaywan”, the Aani Instant Payment Platform, and the advancing “Digital Dirham” central bank digital currency pilot—these initiatives bolstered efficiency, inclusion, and systemic resilience, the report said.
issacjohn@khaleejtimes.comis Managing Editor at media and has over 45 years of experience in top-tier newspapers across UAE. A seasoned business writer and economic analyst, he brings unmatched insight into the geopolitics and geoeconomics shaping the Gulf and India.
