UAE maintains strong economic growth forecast amidst regional challenges

In 2024, the United Arab Emirates (UAE) achieved remarkable economic progress as its gross domestic product (GDP) climbed to 1.77 billion dirhams ($481.4 billion), marking a significant 4 percent growth. Non-oil sectors played a crucial role in this expansion, contributing 75.5 percent to the overall GDP, emphasizing the country’s commitment to economic diversification. The Central Bank of the UAE has consistently projected a stable real GDP growth of 4 percent for 2024, with hopeful forecasts estimating an increase to 4.5 percent in 2025 and 5.5 percent by 2026. In comparison, Saudi Arabia, the largest economy within the region, achieved a considerably lower growth rate of 1.3 percent in the same year, with its non-oil sector only responsible for 54.8 percent of its GDP. This slower growth rate reflects the ongoing challenges faced by the Kingdom as it implements its Vision 2030 reforms aimed at economic diversification and reducing reliance on oil revenues. In 2024, Saudi Arabia saw a notable 4.8 percent rise in its real estate sector, with construction contributing 11.7 percent and real estate activities contributing 7.8 percent to the non-oil GDP. In the Gulf region, Oman recorded an increase in residential property prices of 7.3 percent year on year during the first quarter of 2025. This rise was significantly driven by an escalation in residential land values, showcasing the robust demand in Oman’s real estate sector. Overall, the real estate price index rose by 5.5 percent quarter over quarter within the same period. As inflationary pressures impacted the consumer price index across the region, especially in Saudi Arabia, costs associated with housing, water, electricity, gas, and other fuels saw a yearly increase of 6.8 percent. Rental prices surged by 8.1 percent in May 2025, improving demand for residential properties in urban areas. Some categories such as food and beverages also experienced price hikes, primarily in items like meat and poultry, attributed to increased consumer demand. Despite certain increases in costs, the overall market conditions in the UAE indicate a robust economy that continues to thrive amid geopolitical tensions and fluctuating regional dynamics.