UAE economy to see 'smaller' impact from global slowdown

24/11/2025 02:30 AST

The impact of the slowdown in major global economies will be "smaller" on the UAE's growth and exports due to its relatively less exposure to those markets compared to other markets across the region, the World Bank said.

"Increased uncertainty about the growth rates of the world's major economies - the US, the European Union, and China - as well as fluctuations in oil prices, are also likely to affect growth projections and other macroeconomic outcomes in Middle East, North Africa, Afghanistan and Pakistan (Menaap) region . Tunisia and Morocco send over half of their manufactured exports to the EU, making fluctuations in the demand of major European economies especially consequential for them. By contrast, the impact is smaller in the UAE, which, despite having substantial manufacturing exports, trades less with the US, China, and the EU and more with Asia - excluding China," it said in its latest report on the regional economies.

Some of the world's top economies are slowing down. In the US, some Federal Reserve officials warned of a possible US recession due to layoffs at major companies, due to a drop in consumer confidence. Similarly, China's economy is also showing signs of slowing down.

The Bank projected that the UAE economy to grow by 4.8 per cent in 2025 - 0.9 per cent faster than in 2024 - and maintain stable growth over the medium term, as activity remains broad-based - with notable contributions from financial services, construction, transport, and real estate.

The 2025 growth forecast for the entire GCC sub-region stands at 3.5 per cent, 0.3 per cent higher than in April.

Although it is somewhat lower than the 4.2 per cent forecast from October 2024, expected growth for 2025 represents a substantial increase from the 2.2 per cent rate recorded in 2024, reflecting both robust growth in the non-oil sector and an increase in oil production, as Opec+ unwinds its cuts at an accelerated schedule relative to earlier plans. Growth is expected to accelerate in all GCC countries in 2025.

In October, the International Monetary Fund (IMF) projected its forecast for the UAE's real GDP at par with the World Bank at 4.8 per cent for the current year, higher than its previous projection released in April.

It projected in its latest World Economic Outlook (WEO) that the UAE's economy will grow by five per cent in 2026, which is the same forecast it had announced in April.

In contrast to the GCC, the World Bank said a significant growth slowdown is expected for the developing oil exporters, including Algeria, Iran, Iraq, and Libya. The 2025 growth forecast for this sub-grouping has declined to just 0.5 per cent - a drop of 0.3 per cent from April forecasts and of 3.2 per cent from those of October 2024, and a substantial decline from the 2.5 per cent growth rate recorded in 2024.

Khaleej Times