The UAE's economy will continue to remain strong in the coming years, thanks to its focus on economic diversification, despite facing numerous challenges such as heightened tensions in the Middle East and declining oil prices, according to analysts.
Oxford Economics forecasts the UAE's gross domestic product to grow by 3.7 per cent this year before rebounding to 5 per cent next year, slightly below the International Monetary Fund's 2025 growth forecast of 5.1 per cent.
However, tensions because of the war in Gaza could weigh on the UAE's non-oil growth through a potential decline in tourism and investment, Scott Livermore, Oxford Economics' chief economist for the Middle East and North Africa said.
“But I think that's kind of pushing the extreme and pushing the crisis quite a bit further than to where we have it now,” Mr Livermore told The National.
“If this kind of measured tit-for-tat continues and doesn't escalate, then I think the impact on growth in 2025 … shouldn't be significant, and shouldn't derail the robust, positive picture” for the UAE.
Mr Livermore however said the real estate market also faces a potential risk of oversupply. Dubai home values have risen for 17 consecutive quarters and are up 20 per cent on an annual basis in the third quarter, according to a report by property consultancy Cushman & Wakefield Core this month.
“And while that risk persists, I think there's probably a number of reasons to be optimistic that we're not in a bubble,” he said, pointing to high demand, Dubai's relative affordability compared to other large cities and supply management.
Mr Livermore also noticed risks around lower oil revenue, although he said it is “not imposing a fiscal constraint”.
Despite these challenges, however, he considers the UAE's economic outlook as “robust and resilient”.
Owing to this positive outlook is the nation's diversification efforts. The UAE, like its partners in the Gulf, is in the middle of transforming its economy from a reliance on oil and gas to sustainable economic growth.
“It boils down to the diversification in the economy that's been achieved, but also the attractiveness that has been evident since Covid and seen as a safe haven, both regionally, but also internationally,” said Emilio Pera, KPMG Lower Gulf chief executive and senior partner.
One crucial economic driver is the UAE's thriving tourism industry.
Dubai welcomed 13.29 million international visitors from January to September this year, compared to 12.40 million at the same time last year, according to data from Dubai's Economy and Tourism.
About 85,000 people visited the Cop28 summit held in Dubai last year, held at the emirate's Expo City which opened in 2021.
“Dubai has become … a very popular destination for global and regional conferences, and that is attracting not only people to attend these but also has had a significant positive impact on tourism,” Mr Pera said.
Dubai's economy grew by 3.3 per cent in the second quarter this year driven by tourism and technology, the Dubai Media Office said this month.
Underscoring tourism's economic importance, Abu Dhabi's tourism body announced in April it would invest more than $10 billion in infrastructure as part of the country's efforts to welcome visitors.
Another major factor in the UAE's diversification strategy is its adoption of artificial intelligence. The UAE, which hopes to become a global hub for AI and semiconductors, has recently made major deals with leading players in the sector.
Abu Dhabi-based AI company G42 announced a partnership with Nvidia in September to help improve global weather forecasting, which followed a separate partnership G42 made with Nvidia's Earth-2. In April, Microsoft announced a $1.5 billion investment in G42 to help build on the UAE's initiatives as well as other countries.
KPMG anticipates the tech sector will contribute to 19.4 per cent of the UAE's GDP within the next decade, owing in part to the country's AI initiatives.
The firm's CEO Outlook survey, published in September, showed generative AI is a top investment priority for 52 per cent of UAE respondents, compared to 64 per cent globally.
“[The UAE is] definitely taking a more measured approach, taking a responsible approach to implementation of AI and generative AI in the market,” Mr Pera said, referring to data management and quality of data.
Chief executives in the UAE are also confident about their company's growth prospects, according to the KPMG survey. The survey found that 56 per cent of chief executives in the UAE anticipate a significant return” on their environmental, social, and governance investing within the next three to five years.
Accounting for this optimism is a business-friendly environment.
The UAE offers incentives aimed at increasing small and medium enterprises established in the country, while the creation of a retirement and golden visa has also enticed people to remain longer.
“It wasn't as attractive for people to see the UAE as a longer-term residential opportunity, and those visa changes have definitely enabled that,” Mr Pera said.
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Benefits of first-time home buyers' scheme
- Priority access to new homes from participating developers
- Discounts on sales price of off-plan units
- Flexible payment plans from developers
- Mortgages with better interest rates, faster approval times and reduced fees
- DLD registration fee can be paid through banks or credit cards at zero interest rates
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Dust and sand storms compared
Sand storm
- Particle size: Larger, heavier sand grains
- Visibility: Often dramatic with thick "walls" of sand
- Duration: Short-lived, typically localised
- Travel distance: Limited
- Source: Open desert areas with strong winds
Dust storm
- Particle size: Much finer, lightweight particles
- Visibility: Hazy skies but less intense
- Duration: Can linger for days
- Travel distance: Long-range, up to thousands of kilometres
- Source: Can be carried from distant regions
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The specs
- Engine: 3.9-litre twin-turbo V8
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- Torque: 760nm
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The specs: 2018 Nissan Patrol Nismo
Price: base / as tested: Dh382,000
Engine: 5.6-litre V8
Gearbox: Seven-speed automatic
Power: 428hp @ 5,800rpm
Torque: 560Nm @ 3,600rpm
Fuel economy, combined: 12.7L / 100km
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Labour dispute
The insured employee may still file an ILOE claim even if a labour dispute is ongoing post termination, but the insurer may suspend or reject payment, until the courts resolve the dispute, especially if the reason for termination is contested. The outcome of the labour court proceedings can directly affect eligibility.
- Abdullah Ishnaneh, Partner, BSA Law
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The alternatives
• Founded in 2014, Telr is a payment aggregator and gateway with an office in Silicon Oasis. It’s e-commerce entry plan costs Dh349 monthly (plus VAT). QR codes direct customers to an online payment page and merchants can generate payments through messaging apps.
• Business Bay’s Pallapay claims 40,000-plus active merchants who can invoice customers and receive payment by card. Fees range from 1.99 per cent plus Dh1 per transaction depending on payment method and location, such as online or via UAE mobile.
• Tap started in May 2013 in Kuwait, allowing Middle East businesses to bill, accept, receive and make payments online “easier, faster and smoother” via goSell and goCollect. It supports more than 10,000 merchants. Monthly fees range from US$65-100, plus card charges of 2.75-3.75 per cent and Dh1.2 per sale.
• 2checkout’s “all-in-one payment gateway and merchant account” accepts payments in 200-plus markets for 2.4-3.9 per cent, plus a Dh1.2-Dh1.8 currency conversion charge. The US provider processes online shop and mobile transactions and has 17,000-plus active digital commerce users.
• PayPal is probably the best-known online goods payment method - usually used for eBay purchases - but can be used to receive funds, providing everyone’s signed up. Costs from 2.9 per cent plus Dh1.2 per transaction.
Conflict, drought, famine
Estimates of the number of deaths caused by the famine range from 400,000 to 1 million, according to a document prepared for the UK House of Lords in 2024.
It has been claimed that the policies of the Ethiopian government, which took control after deposing Emperor Haile Selassie in a military-led revolution in 1974, contributed to the scale of the famine.
Dr Miriam Bradley, senior lecturer in humanitarian studies at the University of Manchester, has argued that, by the early 1980s, “several government policies combined to cause, rather than prevent, a famine which lasted from 1983 to 1985. Mengistu’s government imposed Stalinist-model agricultural policies involving forced collectivisation and villagisation [relocation of communities into planned villages].
The West became aware of the catastrophe through a series of BBC News reports by journalist Michael Buerk in October 1984 describing a “biblical famine” and containing graphic images of thousands of people, including children, facing starvation.
Band Aid
Bob Geldof, singer with the Irish rock group The Boomtown Rats, formed Band Aid in response to the horrific images shown in the news broadcasts.
With Midge Ure of the band Ultravox, he wrote the hit charity single Do They Know it’s Christmas in December 1984, featuring a string of high-profile musicians.
Following the single’s success, the idea to stage a rock concert evolved.
Live Aid was a series of simultaneous concerts that took place at Wembley Stadium in London, John F Kennedy Stadium in Philadelphia, the US, and at various other venues across the world.
The combined event was broadcast to an estimated worldwide audience of 1.5 billion.
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