The UAE’s GDP is forecast to grow by 5% year-over-year in 2025, surpassing global economic growth, which is projected at 3.2%, according to a recent report. This performance will be driven by robust non-oil economic activity and supported by initiatives aligned with the UAE Centennial 2071 vision, focusing on economic diversification and strategic infrastructure investments.
Key Drivers of Growth:
Private Sector and Population Growth: Lower interest rates are expected to stimulate private sector investments, boosting employment and domestic consumption. Population growth will further drive economic activity, especially in private consumption, despite a possible moderation in pace.
Inflation Easing: Global inflationary pressures have subsided, with durable and nondurable goods experiencing price declines. Wage growth moderation is also expected to curb inflation in services, with global inflation forecasted at 3.2%.
Policy and Economic Themes:
Shifts in Monetary and Fiscal Policy: The global economy will adjust to changing monetary and fiscal policies, aiming for equilibrium in growth and inflation rates.
Tourism Growth: The GCC’s enhanced tourism offerings and strong currency pegged to the USD will continue to attract global and regional travelers, positioning the region as a leading destination.
Consumer Behavior: Rising prices may lead to “trading down,” where consumers opt for more affordable alternatives. This trend is also visible in tourism, with travelers seeking cost-effective yet similar experiences to popular destinations.
The experience economy continues to thrive, with consumers prioritizing memorable experiences over material possessions. Notably, Saudi Arabia and Qatar have observed significant growth in spending on leisure and entertainment, driven by global events and expanded attractions.
Migration and Financial Flows:
Migration Impact: Inbound migration has fueled population growth, with the UAE seeing a 10.8% increase in its population between 2019 and 2023 due to net migration.
Remittances: Migration has bolstered global remittances, which grew from $128 billion in 2000 to $857 billion in 2023. This growth is expected to continue, aided by the digitization of payment systems that enhance efficiency and convenience.
Women in the Workforce:
The rise of the SHEconomy is shaping global economic trends. In the UAE, women’s workforce participation stands at 55.4%, driven by job creation in healthcare, education, and other female-dominated sectors. The flexibility of remote work has further facilitated women’s reentry into the labor market, boosting household disposable incomes and driving consumption growth.
Outlook for 2025:
With continued non-oil GDP growth, strategic investments, and evolving fiscal policies, the GCC region is poised to outperform global markets, maintaining its position as a hub for economic resilience and innovation.
Published On: 17 Dec 2024
Source: https://economymiddleeast.com/news/uae-gdp-to-grow-by-5-percent-in-2025-report/
