A. SREENIVASA REDDY (ABU DHABI)
The UAE economy has grown at 5.1% year on year (YoY) in the first three quarters of 2025, according to the latest Quarterly Economic Review released by the Central Bank of the UAE (CBUAE).
The growth was driven by rapid expansion in the non-hydrocarbon sector, which grew by 6.1% YoY, and a strong recovery in hydrocarbon GDP in Q3 2025, which rose by 6.5% YoY.
The CBUAE estimates UAE growth at 5.6% in 2025 and projects it to remain at 5.6% in 2026.
“Growth is expected to be driven primarily by non-hydrocarbon sectors, particularly financial and insurance services, manufacturing, and construction, alongside an expected increase in oil production, aligning with OPEC+ quota adjustments,” the report said. The central bank expects growth to moderate to 4.4% in 2027.
The UAE’s non-oil foreign trade of goods rose by 24.5% YoY to Dh2.53 trillion in the first nine months of 2025. Non-oil exports surged by 45% YoY to Dh 571.4 billion, supported mainly by higher exports of gold, jewellery, and aluminium.
Switzerland was the leading export destination, accounting for 21.2% of total non-oil exports, followed by India (12.9%) and Hong Kong SAR (11.6%). Gold accounted for 57.3% of non-oil exports, with jewellery (5%) and aluminium (3.9%) also contributing.
Re-exports increased by 13.0% to Dh 514.9 billion, with Saudi Arabia remaining the largest market at 16.6%, followed by Iraq (10.1%) and India (6.5%).
Telecommunications equipment accounted for 21.8% of re-exports, while diamonds (8.7%) and motor vehicles (7.3%) were also among key categories.
Imports rose by 22.3% to Dh1.443 trillion, with China remaining the largest source at 18.5%, followed by India (6.8%) and the US (5.5%). Gold accounted for 28% of imports, followed by telecommunications equipment (9.6%) and motor vehicles (6.1%).
Oil production averaged 3.12 million barrels per day in 2025, up 6.9% compared to 2024, supported by OPEC+ quota adjustments. Production rose sharply by 10.5% YoY in Q3 and 16.6% YoY in Q4. Domestic gas production also expanded, growing by 5% and 5.8% YoY in Q3 and Q4, respectively, with annual growth of 2.7%.
Non-hydrocarbon growth remained broad-based, led by financial and insurance services, construction, manufacturing, real estate and wholesale and retail trade, which together contributed significantly to overall growth.
“In the medium term, prospects appear broadly balanced, underpinned by resilient non-hydrocarbon expansion, continued adoption of AI with the scope to raise productivity, and generally supportive global financial conditions,” the report said. It added that risks from external demand and global market volatility could weigh on activity, although “strong domestic fundamentals are expected to mitigate the impact of these risks.”
On the labour front, the number of employees covered by the Wages Protection System increased by 14.8% YoY as of December 2025, while average wages rose marginally by 0.1% YoY, indicating strong employment growth alongside stable wage levels.
The UAE maintained a fiscal surplus of 4.4% of GDP in the first three quarters of 2025, compared to 7.1% a year earlier, reflecting higher public spending. Total revenue rose by 1.4% YoY, while expenditure increased by 12.8% YoY, driven by higher spending on goods and services, social benefits and capital expenditure.
Inflation remained contained at 1.3% in 2025, supported by declines in transport and textile prices and favourable food price trends. Abu Dhabi recorded inflation of 0.3%, while Dubai saw 2.8%. Inflation accelerated to 1.9% YoY in Q4 2025, mainly due to rising housing and transport costs.
The CBUAE maintained its inflation forecast at 1.8% for 2026, with inflation expected to remain broadly contained at around 2.0% in 2027.