UAE’s Economy to Grow by 5.6% This Year

Exceeding the global growth rate, the UAE economy is set to grow by 5.6% this year, according to a latest report entitled “Shaping the Future of Investment: Artificial Intelligence and the Interest Rate System,” which was released by the First Abu Dhabi Bank in its Global Investment Outlook 2025.

The report expects that the Gulf Cooperation Council (GCC) countries, especially the UAE, will achieve economic growth that exceeds global growth in 2025, driven by strategic investments, economic diversification, and strong expansion in non-oil sectors.

According to the report, the GCC’s GDP growth rate is expected to double from 2.1% in 2024 to 4.2% in 2025, while the UAE’s economic growth rate is expected to rise from 4.5% to 5.6%, exceeding the International Monetary Fund’s global growth forecast of 3.2%.

Michel Longhini, Head of Private Banking Group at First Abu Dhabi Bank, said that the global economic landscape in 2025 presents many challenges, but the GCC continues to consolidate its position as an economic environment full of promising opportunities.

“The report provides a comprehensive roadmap for our clients to benefit from various new trends, from AI-driven transformations to green energy investments, with strong performance in regional markets, while finding effective solutions to global economic challenges,” Longhini said.

The report’s main themes include “AI-driven transformation”, where AI is expected to fundamentally transform various sectors, opening up broad investment horizons. Unlike previous technological breakthroughs, actual applications of AI have already become a key element in investment and mergers and acquisitions deals.

Visions Driving Growth

It also confirmed that national strategic initiatives, such as the UAE Vision 2031 and Saudi Vision 2030, continue to drive growth in the fields of technology, entrepreneurship, and non-oil sectors. GCC stock markets are expected to achieve returns of 12% to 13% in 2025, supported by recovery in vital sectors and financial stability.

Longhini also said that the Middle East is poised to transform from being a major player in the oil sector to a global hub for sustainable energy, with investments in renewable energy generation, grids and storage expected to rise from $1.2 trillion in 2024 to $2.4 trillion by 2030.

Regional investment in the energy sector is expected to reach $175 billion in 2024, with 15% of this allocated to clean energy. Strategic partnerships between the public and private sectors will be key to strengthening the region’s position in the low-carbon energy market, Longhini said.

Regarding emerging market opportunities, the report said that India continues to achieve sustainable economic growth, while China was witnessing major transformations in its markets, which creates attractive investment opportunities.

However, the importance of adopting a diversified investment approach to ensure that economic risks are reduced in order to effectively exploit these opportunities, the report added.