World Bank Report Forecasts UAE Economy to Grow by 4.8%

The World Bank’s Fall 2025 edition of the Gulf Economic Update (GEU), released today, projects that the United Arab Emirates will experience a 4.8 percent expansion in its economy. This forecast underscores the nation’s ongoing momentum and resilience across multiple sectors.

A Balanced and Diversified Growth Model

Titled “The Gulf’s Digital Transformation: A Powerful Engine for Economic Diversification,” the report emphasizes that the UAE continues to enjoy strong, broad-based growth supported by a balance between oil-dependent and non-oil sectors. The country has emerged as a regional leader in diversifying its export base, reflecting its long-term economic strategy.

Alongside the UAE, the report outlined expected growth rates for other Gulf Cooperation Council (GCC) nations in 2025: Saudi Arabia at 3.8 percent, Bahrain at 3.5 percent, Oman at 3.1 percent, Qatar at 2.8 percent, and Kuwait at 2.7 percent. These projections highlight the region’s overall economic stability, despite differing levels of diversification.

Key Focus Areas of the Report

The GEU emphasizes three central pillars: monitoring changes in economic diversification over the past decade, analyzing macroeconomic trends, and assessing the pace of digital transformation. Together, these elements provide a comprehensive view of the GCC’s progress and challenges.

The report evaluates the effectiveness of economic diversification initiatives in Gulf countries over the past ten years. While progress has been moderate, several encouraging indicators have emerged recently, signaling a positive trajectory for regional economic resilience.

Digital Transformation Accelerates

A significant highlight of the report is the rapid digital transformation across the Gulf, including the accelerated adoption of artificial intelligence. All GCC nations now have advanced telecommunications infrastructures, boasting more than 90 percent 5G coverage and affordable high-speed internet, which serve as a foundation for digital growth.

Investments in Technology and AI

Substantial investments in data centers and high-performance computing are enhancing the region’s AI readiness. The UAE and Saudi Arabia, in particular, are positioning themselves as leaders both regionally and globally, leveraging technology to drive innovation and competitiveness.

The report also notes the importance of supportive ecosystems, including innovation hubs, financing facilities, and government initiatives that embrace generative AI applications. These measures have strengthened the region’s capacity to capitalize on technological advancements.

Expert Insights on Diversification

Safaa El Tayeb El Kogali, World Bank Division Director for the GCC, stressed that economic diversification and digital transformation are essential, not optional, for long-term stability and prosperity. She highlighted that the Gulf’s investments in infrastructure, computing capabilities, and AI talent provide a strong foundation for regional leadership and innovation, contingent on addressing environmental and labour-market challenges.

Advancing Digital Competitiveness

The report also highlights that women’s participation in STEM fields across the Gulf surpasses the global average. This trend enhances the region’s digital competitiveness and demonstrates the importance of inclusive growth in driving innovation.

To fully leverage diversification and digital transformation, the report recommends supporting small and medium-sized enterprises in adopting AI solutions, while also implementing workforce upskilling programmes. These steps are critical to closing labour-market gaps and maximizing economic benefits from technology-driven growth.