Inflation Analysis: Why UAE Appeals to DACH Businesses
- 08.08.2025
- Posted by: Uwe Hohmann
- Categories: Company Setup, Dubai, Europe
For nearly two decades, we have been helping businesses across the DACH region expand internationally and optimize their operations for growth. As inflation patterns shift across Germany, Austria, and Switzerland, we are seeing more companies explore alternatives that offer greater cost predictability and business-friendly environments. One destination increasingly on their radar? The United Arab Emirates.
Here is a structured look at how inflation in the DACH region (Germany, Austria, Switzerland) compares to the United Arab Emirates:
| Country | Inflation Rate (Year-on-Year) |
Source |
|---|---|---|
| Germany | 2.0% (July 2025) | German Federal Statistical Office |
| Austria | 3.5% (July 2025) | Statistics Austria |
| Switzerland | 0.2% (July 2025) | Swiss Federal Statistical Office |
| UAE | 2.1% (2025 projection) | International Monetary Fund |
How inflation is shaping business in DACH
In Germany and Austria, inflation has climbed above central bank targets, pushing up wages, energy bills and borrowing costs. While Germany’s 2% rate is fairly moderate, Austria’s 3.5% in July marked its highest level since April 2024, driven by increases in prices for industrial goods and clothing. Also, many smaller online retailers report falling revenues as they struggle to pass rising costs to price-sensitive consumers.
Switzerland stands apart: its 0.2% inflation reflects low growth pressures and strong currency. In fact, the Swiss National Bank cut its policy rate to 0% in June 2025 to ward off deflationary risks, and still sees inflation remaining under 1% through 2026. That ultra-low inflation means very stable input costs but also shows weak domestic demand.
Why the UAE offers a more predictable cost base
In contrast, the UAE’s consumer prices are projected to rise about 2.1% in 2025, a level that balances gentle demand-side growth without overheating the economy. Anchored by the AED’s peg to the USD and government subsidies on key utilities, inflation stays both stable and transparent, giving firms confidence in budgeting.
That stability is part of a broader pro-business framework. The World Bank ranks the UAE 16th out of 190 economies for ease of doing business, noting streamlined company registration and minimal bureaucracy. It also tops the Global Entrepreneurship Monitor for the fourth year running, thanks to easy access to funding, solid policy support, and world-class facilities.
The bottom line
While DACH firms grapple with uneven inflation (moderate in Germany, high in Austria, ultra low but economically concerning in Switzerland), the UAE delivers what businesses need most: predictability and growth potential.
For companies weighing where to locate or expand, the UAE’s blend of controlled price growth, favorable corporate income tax rates, no personal income tax, and global connectivity creates a compelling value proposition. The question is not whether economic uncertainty will continue in traditional European markets, but whether your business can afford to wait while opportunities in more stable, business-friendly environments accelerate past you
Comprehensive UAE business solutions
With nearly two decades of experience helping DACH companies make major transitions, we understand both the challenges you are facing and the opportunities waiting in the UAE.
Our comprehensive services are designed to support you every step of your business journey in the UAE:
- Company Formation: We guide you through all aspects of setting up your company, whether in a free zone or on the mainland, ensuring you choose the best option for your business.
- Visa and Emirates ID Services: We streamline the process of securing visas and Emirates IDs for you and your employees, allowing you to focus on your business operations.
- Accounting: Our team ensures your business stays compliant with local financial regulations, which is crucial for maintaining good standing in Dubai’s business community.
- Tax: We help manage Dubai’s tax environment, ensuring your business remains compliant while optimizing your tax position.
- Business Consulting: Leveraging our deep understanding of Dubai’s market, we provide valuable insights and help you develop effective strategies to succeed.
Visit our services page to learn more about everything we do.
