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UAE: Economy set to grow by 5.2% in 20256 min read

Author: Omar Sami
Managing Partner Attorney at German Law Legal- & Tax Consultant

The UAE’s economy is expected to see significant growth, with the country’s central bank predicting that its overall economic output, or GDP, will increase by 5.2% by 2025.

The bank forecasts that the UAE’s economy will grow by 4.2% in 2024, leading up to a higher growth rate the next year. This follows a predicted expansion of 3.1% in 2023.

In its latest quarterly economic report, the bank outlines expectations for a 4.7% increase in the non-oil sector of the economy for both 2024 and 2025. The oil sector, on the other hand, is expected to grow by 2.9% in 2024, with a notable increase to 6.2% in 2025.

From January to September 2023, the UAE also reported a strong financial performance, with a surplus of AED 61 billion (around USD 16.6 billion), which is 4.4% of its GDP. This was a result of earning about AED 370 billion in revenue against spending approximately AED 309 billion.

The introduction of a corporate income tax is likely to further improve the government’s financial situation by increasing its income sources beyond just oil.

Additionally, a strong showing in the non-oil private sector is indicated by a Purchasing Managers’ Index score of 56.6 in January, showing businesses feel confident and are seeing steady demand and sales. This environment is expected to support further production growth and investment in new projects, which will help the UAE’s efforts to make its economy more varied and less dependent on oil.

However, these optimistic growth predictions from the UAE’s central bank don’t match up with the more cautious estimates from the World Bank, which projects the UAE’s real GDP growth at 3.4% for 2023, with a slight increase to 3.7% in 2024, and 3.8% in 2025.

How TME Services Can Support You

With the UAE’s economy on a strong upward trajectory, it’s becoming an increasingly attractive place for setting up a business and considering relocation. The country’s significant economic growth, especially in the non-oil sector, suggests a thriving market for new businesses and opportunities. The government’s efforts to diversify the economy and create a more business-friendly environment, including the introduction of a federal corporate tax to stabilize income, make it a ripe time for entrepreneurs and companies to consider making a move.
With over 18 years of experience in the UAE and the Middle East, we specialize in legal, tax, accounting, and compliance matters. Visit our services page to learn more about everything we do.

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