The International Monetary Fund (IMF) has predicted that the United Arab Emirates’ near-term growth would remain robust at about 4% in 2025, even though oil production was lower than anticipated due to OPEC+ agreements.
The IMF made this announcement following a staff visit to the United Arab Emirates to talk about the country’s policy and reform priorities, as well as economic and financial developments and the outlook.
“Near-term growth is strong and expected to remain healthy at around 4% in 2025, despite lower-than-expected oil production related to OPEC+ agreements. Non-hydrocarbon activity is boosted by tourism, construction, public expenditure, and continued growth in financial services. Capital inflows remain strong, attracted by social and business-friendly reforms, and contribute to ongoing demand for real estate, which is driving further growth in house prices across different segments and locations,” the global monetary authority remarked.
“Hydrocarbon GDP is expected to grow above 2.0% this year, following OPEC+ decisions to sustain production cuts, and as the UAE implements a more gradual OPEC+ quota increase. Inflation is expected to remain contained around 2.0% in 2025 despite higher housing and utilities-related costs,” IMF added.
The statement predicted that despite lower oil production and fluctuating oil prices, hydrocarbon revenue would fall, “but fiscal and external surpluses are projected to remain comfortable.”
The fiscal surplus, which was estimated to be 5% of GDP in 2024, is predicted to moderate to about 4% of GDP in 2025. Nonetheless, it is anticipated that non-hydrocarbon revenue will rise gradually over the ensuing years due to the continuous corporate income tax implementation.
About 30% of GDP is still the amount of public debt that is contained. With international reserves exceeding 8.5 months’ worth of imports, the current account surplus is estimated to be approximately 7.5% of GDP.
It anticipated that “while asset quality further improved in 2024,” the UAE banks would continue to be sufficiently capitalised and liquid overall. Bank profitability has been maintained despite persistently high interest rates by strong domestic activity and a strong demand for credit.