Today's Edition
Khaled Al Khawaldeh (Abu Dhabi)
The UAE and broader GCC economies are expected to sustain growth and demonstrate resilience despite challenges arising from fluctuations in oil output and potential US tariffs, according to recent reports by global firms Moody’s and Standard Chartered
Global credit rating agency, Moody’s, predicts that economic growth in the Middle East and North Africa (MENA) region will accelerate to 2.9% in 2025 from an estimated 2.1% in 2024 amid partial unwinding of oil production cuts, which had slowed down GCC economies in the last two years.
This growth is expected to be particularly pronounced in the oil-exporting countries where growth is predicted to surge to 3.5% readjusted from last year’s forecast of just 1.9%.
Standard Chartered’s Global Market Outlook for 2025 predicts that the GCC will outperform the slowing global economy based on robust non-oil growth. It said lower interest rates would help borrowing-sensitive industries across the region to expand their operations in the new year.
“Amid global economic uncertainties, the GCC emerges as a rare bright spot, showcasing its resilience and adaptability,” Ayesha Abbas, Managing Director and Head of Affluent and Wealth Solutions, Europe, Middle East and Africa and UAE at Standard Chartered, commented on the report.
“By focusing on economic diversification and leveraging opportunities in non-oil sectors, the region continues to chart a path of sustainable growth.”
Alexander Perjessy, Vice President, Senior Credit Officer at Moody’s, said that non-hydrocarbon growth would remain strong in the UAE in 2025 hovering around 5%, despite slightly slowing due to the completion of some previous infrastructure projects.
Perjessy noted that structural reforms including the relaxation of foreign ownership limits, the introduction of long-term residency permits and the lifting of some social restrictions, have solidified the country’s appeal as a hub for global trade, transportation, tourism and financial services.
However, there is a sustained risk that growth could be hampered from increases in oil production outside the OPEC+ group, particularly from the US as the new administration prepares to take office. As well as lower demand from stagnating economies in Europe and China.
To date, the OPEC+ group has reacted to this risk by delaying production increases to April 2025. This resulted in the IMF lowering GDP growth predictions for the region in its 2025 outlook from 3.9% in October down to 3.6%.
Nevertheless, the IMF noted the region’s resilience in limiting spillover from conflicts, and the increasing diversification of GCC economies. In a report on the region’s progress, it said the governments and the private sector have maintained healthy balance sheets while keeping inflation under control, offering a positive outlook for the coming year.
