Key Highlights

The UAE’s GDP is expected to rise by 5% annually in 2025.

The UAE’s population grew by 10.8% between 2019 and 2023 as a result of net migration.

Worldwide remittances increased from $128 billion in 2000 to $857 billion in 2023, with a further 3% growth predicted in 2024 and 2025. 

According to the World Bank data, 55.4% of UAE workers are women.

According to a report released on Monday 16 Dec, 2024, the UAE’s GDP is expected to rise by 5% annually in 2025, continuing to outpace the 3.2% growth estimate for the global GDP, which is only expected to increase by 3.1% in 2024.

According to the “Economic Outlook 2025” report from the Mastercard Economics Institute, consumer price inflation is expected to hit 2.3%, and consumer spending is expected to increase by 4.3% nationwide.

Strong economic activity outside of oil is the foundation of this expansion. “Efforts to diversify the economy will continue as the government uses robust financial sheets to fund infrastructure investment in accordance with the UAE Centennial 2071, a comprehensive vision for the country’s future. 

Lower interest rates should also encourage private sector investment, boosting domestic consumption and jobs. 

According to a statement, even if the rate slows, population growth is still a significant factor in the region’s economic activities, especially private consumption.

The region’s economies are probably going to continue to benefit from tourism. The GCC is one of the world’s fastest-growing travel destinations thanks to its persistent attempts to expand its tourism services. Additionally, the demand for outbound travel is being fueled by the strength of the US dollar-pegged currencies in the region.

The GCC region continues to beat most international markets because of sustained public and private investment that is fueling strong non-oil GDP growth. After an excellent 2024, the world economy prepares for another year of growth, influenced by shifting monetary and fiscal policy.

According to Khatija Haque, chief economist for EEMEA at Mastercard, “the structural forces that have changed the landscape will become more apparent as the business cycle matures, helping define the new landing place for economies around the world.”

The goals of consumers to purchase may change as the cost of goods and services rises. A price increase is unlikely to significantly affect the quantity of essential goods and services that are purchased because there aren’t many alternatives. 

“But for those with different price points, we might see ‘trading-down’ – choosing less expensive versions of the product or experience,” the statement said.

The region continues to see a strong willingness to emphasize spending on “big moments” over material goods, which is consistent with the experienced economy’s sustained expansion in preceding years. 

This tendency is particularly noticeable in Saudi Arabia and Qatar, where, as of February 2024, spending on meaningful experiences increased by 451% and 503%, respectively, over the same period in 2019. 

According to the most recent data from September 2024, there has been a 326 percent increase and a 279 percent increase. 

“The countries’ emphasis on growing their range of leisure and entertainment options and hosting international sporting events that draw sizable crowds from all over the world are the main drivers of this surge,” Mastercard stated.

There have been notable changes in individuals and, consequently, capital in recent years. The region’s human capital is substantially enhanced by inbound migration. The UAE’s population grew by 10.8% between 2019 and 2023 as a result of net migration.

Significant remittances are another benefit of migration; these remittances act as a lifeline between families from low- and middle-income communities in emerging economies and expats employed in thriving economies like the United Arab Emirates. 

According to a World Bank research referenced in the paper, worldwide remittances increased from $128 billion in 2000 to $857 billion in 2023, with a further 3% growth predicted in 2024 and 2025. 

“Remittance growth is expected to be sustained through 2025 by economic recovery and local reforms, while recipients can transition to digital and mobile channels due to the ongoing digitization of the payments industry, which offers significant cost savings, security, and convenience,” the statement said.

The Rise of the Economy

In the global economy, the “great resignation” gave way to the “great return.” There has been a return of workers to varied degrees throughout nations, especially among the younger generation and, surprisingly, women. According to the most recent World Bank data, 55.4% of UAE workers are women.

The reason for this can be explained in a number of ways. First, the disproportionate number of jobs created in industries with a high proportion of women, such as healthcare and education, is probably reflected in the labor force participation of women. 

Furthermore, women, who are frequently still the major caregivers, benefit from the increased flexibility and popularity of remote work since it makes it simpler to raise children while working. 

By raising consumers’ disposable incomes, many of these dynamics will still be present in 2025, which will benefit the economy by promoting consumption growth.

Global inflationary pressures continue to ease

Due in large part to declining prices for durable goods and decreased inflation for nondurable products, inflation in major economies dramatically reduced in 2024. 

Tariffs still pose an upside risk to product prices, but a slowdown in wage growth should reduce the inflation of services. With the top and bottom 10% outliers eliminated, the Mastercard Economics Institute projects reduced worldwide inflation to be 3.2%.

The UAE is still on track to meet its ambitious goals and make a substantial contribution to regional economic dynamics within the GCC framework as it works to improve its global economic standing through innovation and development initiatives in line with long-term visions like the UAE Centennial 2071.

In conclusion, the UAE economy has a bright future as long as it builds on its advantages and uses strategic planning and execution to overcome any obstacles.