UAE GDP To Grow 4.0% In 2025; Non-Oil Sectors Lead

After a successful trip by the President of the United States, many may be thinking what’s ahead for the UAE economy in 2025. Well it’s the UAE’s economy that remains poised for sustained growth, fuelled by a mix of robust domestic momentum and an ongoing push to diversify beyond oil. Official forecasts and global institutions align in predicting healthy expansion. The IMF projects 3.8% growth in 2024 and 4.0% in 2025, among the highest in the Gulf region. (By comparison, Saudi Arabia’s growth is forecast to be around 3% next year) This optimism reflects strong non-oil activity even as oil production gradually rises.

According to Josh Gilbert, Market Analyst at eToro, on-oil sectors are playing an increasingly prominent role in the UAE’s economy. In 2024, industries like tourism, transportation, financial services, construction, real estate, and communications were major growth drivers, highlighting the country’s diversification push.

International visitor numbers and spending have surged; travel and tourism are on track to contribute roughly 13% of UAE GDP in 2025 amid record-high tourist spending. Large-scale infrastructure projects, from expanding airports and ports to new museums and entertainment venues, further fuel domestic demand and investment. These efforts build on the legacy of events like Expo 2020, which boosted tourism and global visibility. This is also supported by ample capital from the UAE’s sovereign wealth funds, which continue to invest in sectors ranging from renewable energy to logistics and technology.

While the UAE’s diversification efforts extend across several sectors, one of the most exciting developments is the country’s emergence as a hub for the digital economy and fintech growth. Targeted public investments in AI, digital infrastructure and advanced technologies are accelerating innovation-driven growth. In the last month, Donald Trump’s visit to the Middle East shone a spotlight on the tech sector building out infrastructure in the region to support the growth of AI. This included Trump’s support for building the largest AI data centre outside of the US, in Abu Dhabi, which looks set to establish the UAE as a new hub for AI growth. This is big news for growth and AI-exposed stocks in the region.

At a time when global trade is in the spotlight with tariff talk, the UAE’s been quietly strengthening its economic ties worldwide. Its non-oil trade smashed records in 2024, soaring past AED 2 trillion, a 15% jump from the year before. New trade deals, like the Comprehensive Economic Partnership Agreements (CEPAs), are opening doors to fast-growing markets in Asia, Africa, and beyond, giving UAE exporters a bigger stage. At the same time, the UAE is also focused on sustainability. The country is investing heavily in clean energy and green tech, with a bold plan to triple renewable energy capacity by 2030 as part of its net-zero push. This is not only helping to address global climate goals, but it also spurs growth in new industries, as well as creating thousands of jobs.

Thanks to years of diversification, the UAE is less reliant on oil than in the past, and sizable fiscal buffers (aided by oil windfalls in good years) provide resilience. The UAE does have strong prospects throughout 2025, with a diversified growth engine. But, its main growth engine could be the risk, oil prices. After two supply hikes from OPEC+ and the trade war that is dampening consumption on the world’s largest importer, China, prices are down around 15% this year. A further drop in oil prices could hold back spending on non-oil economic activity, potentially slowing down the growth of diversification in some of the sectors mentioned. However, for investors, the economy offers a compelling mix of high-growth sectors (tourism, tech, infrastructure) backed by prudent economic management.