flag United Arab Emirates United Arab Emirates: Economic and Political Overview

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Economic Outline

Economic Overview

The United Arab Emirates has transformed from a modest desert economy into a global hub for trade, finance, tourism, and innovation, underpinned by its vast oil wealth and dynamic diversification efforts. Strategic reforms, free trade zones, and robust global investments continue to drive the nation’s growth and attract international business. Following a rate of 3.6% in 2023, the country’s GDP growth accelerated to 4% in 2024 as the 16 non-oil sectors continued their steady growth pattern over the course of the year. According to the IMF, short-term growth is robust and projected to stay strong at approximately 4% in 2025, despite lower-than-anticipated oil production due to OPEC+ agreements. Non-hydrocarbon sectors are supported by tourism, construction, public spending, and steady expansion in financial services. Capital inflows continue to be strong, driven by social and business-friendly reforms, fueling ongoing demand for real estate and contributing to the rise in house prices across various segments and locations.

The country’s public finances are sound, with moderate consolidated public debt level, strong net external asset position and high GDP per capita. Hydrocarbon revenues are expected to decline due to fluctuating oil prices and lower oil production, but fiscal and external surpluses are forecast to stay strong. The fiscal surplus is projected to decrease slightly to around 4% of GDP in 2025, down from an estimated 5% in the previous year. However, non-hydrocarbon revenues are set to grow steadily, driven by the continued implementation of corporate income tax. Public debt remains stable at approximately 30% of GDP. The current account surplus is expected to be around 7.5% of GDP, while international reserves remain robust, covering over 8.5 months of imports. Banks continue to be well-capitalized and liquid, with asset quality improving further in 2024. Strong domestic activity and sustained demand for credit have bolstered banks' profitability, despite elevated interest rates. Furthermore, the UAE’s Central Bank and sovereign wealth funds own important foreign assets, providing the country with a large liquidity cushion (Abu Dhabi holds the world's fourth-largest sovereign wealth fund) and making the country a net creditor at the global level. After rising to 2.3% in 2023, up from 1.6% the previous year, inflation is expected to remain stable at around 2.0% in 2025, despite higher costs related to housing and utilities (IMF).

The UAE has one of the highest per capita income levels in the world (estimated at USD 82,000 in 2024 at PPP by the IMF) and a highly developed welfare system. It also has one of the lowest rates of unemployment in the Middle East, at 2.2% in 2023 according to the World Bank (while Dubai enjoys the lowest unemployment level in the world, at around 0.5%) and depends heavily on foreign labour (more than 85% of the workforce). A policy of “Emiratisation” has been launched to encourage the employment of the local workforce; nevertheless, the unemployment rate among nationals continues to be considerably high compared to the rate among non-nationals (it varies according to the emirate and is the highest in Abu Dhabi).

 
Main Indicators 2023 (E)2024 (E)2025 (E)2026 (E)2027 (E)
GDP (billions USD) 514.13545.05568.57601.76636.71
GDP (Constant Prices, Annual % Change) 3.64.05.15.14.7
GDP per Capita (USD) 48,14149,55051,29453,88956,613
General Government Gross Debt (in % of GDP) 32.431.431.330.730.2
Inflation Rate (%) 1.62.32.12.02.0
Current Account (billions USD) 54.8347.9246.8947.9246.54
Current Account (in % of GDP) 10.78.88.28.07.3

Source: IMF – World Economic Outlook Database, Latest data available.

Note : (E) Estimated data

 

Main Sectors of Industry

According to the latest figures from the World Bank, agriculture contributes to a mere 0.7% of GDP and employs 1% of the workforce, as most of the country is unsuitable for agriculture and animal husbandry, with an agricultural area of only 390,000 ha (FAO). Hence, around 90% of UAE's food is imported (USDA). Fishing and date-growing are among the main agricultural activities. Despite limited water resources, the UAE government continues to look for new technologies to support the local production of certain strategic commodities.

Manufacturing activities have seen unprecedented growth in recent years, particularly in sectors such as metal processing, furniture, industrial preparation of foodstuffs, aluminium production, construction materials, fertilisers, the petrochemical industry, fibreglass and real estate development. Industry now comprises 47.7% of GDP and employs 30% of the workforce. The portion of GDP from the oil and gas sector has declined gradually (to about 30%, according to the latest estimates) owing to a successful economic diversification policy. The United Arab Emirates is the world's 7th largest oil producer with significant reserves: its oil and gas reserves are estimated to last approximately 100 years at the current rate of consumption. “Operation 300bn”, a 10-year strategy developed by the Ministry of Industry and Advanced Technology (MoIAT), seeks to expand the contribution of the industrial sector to AED 300 billion by 2031. Manufacturing plays a significant role in the UAE's GDP, ranking as the third-largest sector by nominal GDP share. In 2023, manufacturing contributed nearly 10% to the overall nominal GDP of the UAE, with Dubai and Abu Dhabi showing slightly lower proportions at around 8.7% and 6%, respectively; whereas Emirates like RAK and Sharjah have substantial industrial activities. According to the Ministry of Industry, in 2024, the industrial sector's contribution to the UAE's GDP has risen by 57%, with forecasts surpassing AED 210 billion. Industrial exports have also shown strong growth, climbing 63% and expected to exceed AED 190 billion.

The tertiary sector contributes 51.6% of the GDP and employs 69% of the workforce. The main sub-sectors are international trade, air transport, financial activities and tourism. The travel and tourism sector, in particular, has a total contribution of around 12% of the GDP (UAE Official Portal), mainly driven by the Emirate of Dubai, which received 18.72 million international visitors in 2024, up 9% y-o-y. The banking and financial sector is also pivotal: according to Fitch Ratings, UAE banks' financial metrics are benefiting from favourable operating conditions, driven by stable oil prices, controlled inflation, and high interest rates. The banking sector performed exceptionally well in 1H24, with most major banks reporting record-high profits. Lastly, aviation is a key pillar and major driver of Dubai's economic growth. Led by Emirates Group, Dubai Airports, and other aviation entities, the sector supported 631,000 jobs and contributed over AED 137 billion to Dubai's economy in 2023.

 
Breakdown of Economic Activity By Sector Agriculture Industry Services
Employment By Sector (in % of Total Employment) 1.3 29.6 69.0
Value Added (in % of GDP) 0.7 47.7 51.6
Value Added (Annual % Change) 0.9 0.8 6.5

Source: World Bank, Latest data available.

 

Indicator of Economic Freedom

Definition:

The Economic freedom index measure ten components of economic freedom, grouped into four broad categories or pillars of economic freedom: Rule of Law (property rights, freedom from corruption); Limited Government (fiscal freedom, government spending); Regulatory Efficiency (business freedom, labour freedom, monetary freedom); and Open Markets (trade freedom, investment freedom, financial freedom). Each of the freedoms within these four broad categories is individually scored on a scale of 0 to 100. A country’s overall economic freedom score is a simple average of its scores on the 10 individual freedoms.

Score:
76,9/100
World Rank:
14
Regional Rank:
1

Economic freedom in the world (interactive map)
Source: Index of Economic Freedom, Heritage Foundation

 

Business environment ranking

Definition:

The business rankings model measures the quality or attractiveness of the business environment in the 82 countries covered by The Economist Intelligence Unit’s Country Forecast reports. It examines ten separate criteria or categories, covering the political environment, the macroeconomic environment, market opportunities, policy towards free enterprise and competition, policy towards foreign investment, foreign trade and exchange controls, taxes, financing, the labour market and infrastructure.

Score:
7.63/10
World Rank:
20/82

Source: The Economist Intelligence Unit - Business Environment Rankings 2020-2024

 

Country Risk

See the country risk analysis provided by Coface.

 

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Political Outline

Current Political Leaders
President: Sheikh Mohamed bin Zayed Al Nahyan (since May 2022)
Prime Minister and Vice-President: Sheikh Mohammed bin Rashid Al Maktoum (since January 2006)
Next Election Dates
Presidential: 2027
Federal National Council (FNC): October 2027
Current Political Context
Following the appointment of Sheikh Khalid, the eldest son of the Head of the Federation and Abu Dhabi, as Crown Prince of Abu Dhabi in May 2023, the UAE is anticipated to maintain political stability and position him as a possible successor to the presidency of the Federation. The nation's position as a regional and international center for trade, banking, and logistics is expected to be strengthened by this stability. However, it is anticipated that issues with inadequate openness and democratic practices would persist.
The UAE has both chances and risks as a result of the post-Assad developments in Syria. On the one hand, the rehabilitation effort can open up new opportunities for energy and construction firms established in the UAE. However, changes in the Syrian government could lead to a realignment of power in the region and a rise in unpredictability, which could have an impact on the business environment as a whole.
While the UAE has criticized certain actions of Israel's military and Prime Minister Netanyahu, it continues to maintain diplomatic and economic ties with Israel. Furthermore, the UAE has engaged in discussions with the United States and Israel regarding the establishment of a provisional government in post-war Gaza.
Main Political Parties
There are no political parties in the UAE.
Type of State
Federation uniting seven emirates (monarchies): Abu Dhabi, Ajman, Dubai, Fujairah, Ras al-Khaimah, Sharjah and Umm al-Qaiwain.
Executive Power
Each Emirate is governed by an Emir and has its own administration. Every Emir manages his Emirate's resources autonomously.
The Federal Supreme Council, composed of the 7 emirate rulers, is the highest authority of the UAE and holds legislative and executive powers. President and vice president are indirectly elected by the Federal Supreme Council for a 5-year term, with no term limits.
Legislative Power
There is only one Chamber: the Federal National Council. It consists of 40 members of which 20 are appointed by the rulers of the seven Emirates, and 20 are indirectly elected, whereby each Emirate has a number of representatives equivalent to its demographic weight. Their mandate is for four years. This council has only consultative functions.
 

Indicator of Freedom of the Press

Definition:

The world rankings, published annually, measures violations of press freedom worldwide. It reflects the degree of freedom enjoyed by journalists, the media and digital citizens of each country and the means used by states to respect and uphold this freedom. Finally, a note and a position are assigned to each country. To compile this index, Reporters Without Borders (RWB) prepared a questionnaire incorporating the main criteria (44 in total) to assess the situation of press freedom in a given country. This questionnaire was sent to partner organisations,150 RWB correspondents, journalists, researchers, jurists and human rights activists. It includes every kind of direct attacks against journalists and digital citizens (murders, imprisonment, assault, threats, etc.) or against the media (censorship, confiscation, searches and harassment etc.).

World Rank:
131/180
 

Indicator of Political Freedom

Definition:

The Indicator of Political Freedom provides an annual evaluation of the state of freedom in a country as experienced by individuals. The survey measures freedom according to two broad categories: political rights and civil liberties. The ratings process is based on a checklist of 10 political rights questions (on Electoral Process, Political Pluralism and Participation, Functioning of Government) and 15 civil liberties questions (on Freedom of Expression, Belief, Associational and Organizational Rights, Rule of Law, Personal Autonomy and Individual Rights). Scores are awarded to each of these questions on a scale of 0 to 4, where a score of 0 represents the smallest degree and 4 the greatest degree of rights or liberties present. The total score awarded to the political rights and civil liberties checklist determines the political rights and civil liberties rating. Each rating of 1 through 7, with 1 representing the highest and 7 the lowest level of freedom, corresponds to a range of total scores.

Ranking:
Not Free
Political Freedom:
7/7
Civil Liberties:
6/7

Political freedom in the world (interactive map)
Source: Freedom in the World Report, Freedom House

 

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Latest Update: March 2025