The International Monetary Fund (IMF) projects that the UAE's economy will grow by around 4 percent in 2025, despite a decline in hydrocarbon revenue due to OPEC+ agreements and lower oil production.

This growth is expected to be supported by strong domestic activity and ongoing reforms, even as hydrocarbon revenue faces challenges from volatile oil prices.

Ongoing infrastructure investments and trade liberalization through Comprehensive Economic Partnership Agreements are anticipated to enhance tourism and attract foreign direct investment.

While ongoing geopolitical and policy uncertainties pose risks to the UAE's financial conditions, substantial financial buffers are in place to mitigate short-term impacts.

Despite the expected decline in hydrocarbon revenue, fiscal and external surpluses are projected to remain comfortable, although the fiscal surplus may decrease to about 4 percent of GDP in 2025.

Non-hydrocarbon sectors, including tourism, construction, and financial services, are driving economic growth, bolstered by public expenditure and strong capital inflows.

The implementation of a corporate income tax is expected to contribute to a steady increase in non-hydrocarbon revenue.

Public debt levels are stable at around 30 percent of GDP, with a current account surplus projected at approximately 7.5 percent of GDP.

Inflation is anticipated to remain steady at around 2.0 percent in 2025, despite rising costs in housing and utilities.

UAE banks are expected to remain well-capitalized and liquid, with improved asset quality and profitability driven by strong domestic activity.

The IMF commended the UAE's reform efforts, emphasizing the importance of prioritization and sequencing in reforms to support medium-term growth and energy transition.

The IMF highlights the need for improved transparency in monetary operations to support liquidity management and the development of local capital markets.