The United Arab Emirates’ (UAE) economic growth is anticipated to remain strong, with projections indicating a rise of 5.1% in 2025, an increase from 3.8% in the previous year.
This forecast is drawn from the latest second-quarter economic update by the Institute of Chartered Accountants in England and Wales (ICAEW).
In collaboration with Oxford Economics, the forecast emphasizes a notable recovery in oil production combined with significant momentum in the non-oil sector, driven by international trade, tourism, and cutting-edge technology advancements.
The institute anticipates that the UAE’s oil production will average 3.8 million barrels per day by 2027, aligning with the target of expanding capacity to 5 million barrels per day.
“A substantial increase in supply is anticipated from 2027 to 2028 to optimize enhanced production capabilities and maximize gains before the global shift away from fossil fuels becomes prolific,” mentioned the ICAEW in its report.
“This will generate a stable revenue stream and empower the government to bolster overall GDP growth,” according to ICAEW.
The growth in UAE’s non-oil GDP is expected to remain robust, supported by strong purchasing managers’ index (PMI) figures and a significant surge in international trade. The UAE is working towards 27 Comprehensive Economic Partnership Agreements (CEPAs), and foreign trade surpassed Dhs3 trillion for the first time in 2024.
“These agreements are improving market access and enhancing trade conditions,” the report stated, predicting non-oil GDP growth of 4.7% in 2025, consistent with the previous year’s growth rate.
Tourism continues to be a cornerstone of economic expansion. Spending by international visitors is forecasted to reach Dhs267.5 billion in 2025, constituting nearly 13% of GDP. Dubai welcomed 5.3 million international visitors in the first quarter of 2025, marking a 3% increase from the previous year.
The report noted that this growth aligns with the strategic objectives at the Emirate level, with the D33 agenda aiming to establish Dubai as a prominent global tourism hub.
ICAEW also highlighted the recent inauguration of the “US-UAE AI Acceleration” framework, which it described as a significant opportunity for technology investment and knowledge exchange. This initiative was announced during President Trump’s recent visit to the UAE and is anticipated to bolster bilateral collaboration.
Inflation in the UAE is expected to average 2.5% in 2025. Although price pressures are subdued, housing and recreation costs in Dubai remain the primary contributors.
Saudi Arabia: Economic Growth Driven by Increased Oil Production
In parallel, Saudi Arabia’s economy is also experiencing an upswing. ICAEW predicts GDP growth of 5.2% in 2025, an increase from 1.3% in the previous year, spurred by heightened oil production and strong domestic demand.
Oil production is anticipated to average 9.7 million barrels per day this year, boosting oil-sector GDP.
Non-oil sectors — especially construction, trade, and the digital economy — are expanding rapidly as Vision 2030 moves forward. ICAEW forecasts non-oil growth of 5.3% this year, driven by job creation and private sector activity.
GCC and Middle East Outlook: Steadfast Progress Despite Tariffs
Region-wide, Gulf Cooperation Council (GCC) economies are expected to grow by 4.4% in 2025, with Middle East GDP projected to increase by 3.5%, according to ICAEW.
“The GCC economies are demonstrating remarkable resilience amidst evolving global trade dynamics. Investments in tourism, technology, and infrastructure are yielding benefits, reinforcing resilience and establishing a foundation for sustained growth,” stated Hanadi Khalife, head of ICAEW Middle East.
While the US has imposed a 10% tariff on GCC goods, ICAEW expects the effect on the region to be minimal.
Energy exports are excluded, and only about 3% of GCC exports are destined for the US.
“In spite of tariff challenges and increased trade uncertainty, we continue to foresee stronger growth in the Middle East this year compared to 2024,” the report indicated.
The upward adjustment to regional growth is supported by quicker OPEC+ oil supply expansions and ongoing strength in sectors such as tourism, real estate, and capital markets.