Economic growth in the UAE and wider GCC region is forecast to remain strong in 2025, supported by higher oil production, expanding non-oil sectors, and sustained global trade activity. The latest quarterly report from the Institute of Chartered Accountants in England and Wales (ICAEW), prepared with Oxford Economics, highlights continued resilience across the Middle East despite global uncertainties.
UAE Growth Accelerates with Oil and Non-Oil Momentum
The UAE economy is projected to expand by 5.1% in 2025, up from 3.8% last year. The recovery is driven by a combination of rising oil production and robust non-oil sector performance, including international trade, tourism, and technology. ICAEW expects UAE oil production to reach 3.8 million barrels per day by 2027, with additional supply expected through 2028 to capitalize on expanded capacity before global energy transitions reduce fossil fuel demand.
Strong Non-Oil Sector and Trade Expansion
Non-oil GDP is forecast to grow by 4.7% in 2025, supported by strong purchasing managers’ index (PMI) readings and a surge in foreign trade, which exceeded AED 3 trillion for the first time in 2024. The UAE is actively pursuing 27 Comprehensive Economic Partnership Agreements (CEPAs) to enhance trade access and terms with global partners, contributing to the non-oil sector’s momentum.
Tourism and Technology Drive Further Growth
Tourism remains a key growth pillar. International visitor spending is expected to reach AED 267.5 billion in 2025, accounting for nearly 13% of GDP. Dubai recorded 5.3 million international visitors in Q1 2025, up 3% year-on-year, in line with its D33 agenda to become a global tourism hub. Additionally, the recent US-UAE AI Acceleration framework, announced during President Trump’s visit, is set to strengthen bilateral cooperation in technology and investment.
Saudi Arabia Sees Growth Rebound
Saudi Arabia’s economy is forecast to grow 5.2% in 2025, up from 1.3% last year, led by rising oil production and strong domestic demand. Oil output is projected to average 9.7 million barrels per day this year, lifting oil-sector GDP. Non-oil growth is also robust, with sectors such as construction, trade, and the digital economy benefiting from Vision 2030 reforms. ICAEW expects non-oil GDP to grow 5.3%, supported by job creation and private sector activity.
GCC and Middle East Outlook Remains Positive
The broader GCC region is expected to grow 4.4% in 2025, while Middle East GDP is projected to expand 3.5%. Despite the introduction of a 10% US tariff on GCC goods, ICAEW expects limited impact, as energy exports remain exempt and only 3% of GCC exports are directed to the US. Faster OPEC+ oil supply increases and strength in tourism, real estate, and capital markets are expected to support regional growth.
Conclusion
The UAE, Saudi Arabia, and the wider GCC continue to show resilience amid global challenges, with growth supported by diversified non-oil sectors and strategic investments in trade, tourism, and technology. Despite ongoing tariff headwinds, the Middle East’s economic outlook for 2025 remains stronger compared to 2024, positioning the region for continued expansion.
