Economic growth in the UAE is set to remain buoyant, expanding by 5.1 per cent in 2025, up from 3.8 per cent last year.
This is according to the latest Q2 economic update from the Institute of Chartered Accountants in England and Wales (ICAEW).
The forecast, produced in partnership with Oxford Economics, highlights a strong rebound in oil production alongside robust non-oil sector momentum, supported by international trade, tourism and advanced technology.
The institute expects UAE oil production to average 3.8 million barrels per day (bpd) by 2027, in line with efforts to raise capacity to 5mn bpd.
“A significant increase in supply is likely through 2027–2028 to capitalise on enhanced production capacity and maximise returns before a significant global transition away from fossil fuels,” said ICAEW in its latest report.
“This will provide a robust stream of revenue and enable the government to support overall GDP growth,” ICAEW said:
Non-oil GDP growth remains solid, underpinned by strong purchasing managers’ index (PMI) readings and a sharp rise in international trade. The UAE is pursuing 27 Comprehensive Economic Partnership Agreements (CEPAs), and foreign trade exceeded Dhs3trn for the first time in 2024.
Read more: Here’s what the latest S&P PMI index says about the UAE
“These agreements are improving access to key markets and enhancing trade terms,” the report noted, projecting non-oil GDP growth of 4.7 per cent in 2025, in line with last year’s pace.
Tourism remains a central pillar of growth. International visitor spending is expected to reach Dhs267.5bn in 2025, accounting for nearly 13 per cent of GDP. Dubai recorded 5.3 million international visitors in Q1 2025, up 3 per cent year-on-year.
The report stated that this growth “aligns with Emirate-level strategy, where the D33 agenda aims to position Dubai as a leading global tourism hub”.
ICAEW also pointed to the recent launch of the “US-UAE AI Acceleration” framework, which it described as a major opportunity for technology investment and knowledge exchange. The initiative was announced during President Trump’s recent visit to the UAE and is expected to enhance bilateral cooperation.
Inflation in the UAE is forecast to average 2.5 per cent in 2025. While price pressures remain contained, housing and recreation costs in Dubai continue to be the main contributors.
Saudi Arabia: Growth rebounds as oil production rises
Meanwhile, Saudi Arabia’s economy is also gaining momentum. ICAEW forecasts GDP growth of 5.2 per cent in 2025, up from 1.3 per cent last year, driven by higher oil output and strong domestic demand.
Oil production is set to average 9.7mn bpd this year, lifting oil-sector GDP.
Non-oil industries — particularly construction, trade and the digital economy — are expanding as Vision 2030 accelerates. ICAEW expects non-oil growth of 5.3 per cent this year, underpinned by job creation and private sector activity.
GCC and Middle East outlook: Resilience despite tariffs
Across the region, GCC economies are projected to grow by 4.4 per cent in 2025, while Middle East GDP is forecast to expand by 3.5 per cent, according to ICAEW.
“The GCC economies are showing remarkable adaptability amid shifting global trade dynamics. Investments in tourism, technology, and infrastructure continue to pay dividends, strengthening resilience and laying the groundwork for long-term growth,” said Hanadi Khalife, head of Middle East, ICAEW.
While the US has introduced a 10 per cent tariff on GCC goods, ICAEW said the impact on the region will be limited.
Energy exports are exempt, and only around 3 per cent of GCC exports head to the US.
“Despite tariff headwinds and heightened trade uncertainty, we continue to expect Middle East growth to be stronger this year than in 2024,” the report said.
The upward revision to regional growth is supported by faster OPEC+ oil supply increases and sustained strength in sectors such as tourism, real estate and capital markets.
