The economy of the United Arab Emirates has demonstrated strong resilience amid global uncertainty, as stated in the Central Bank of the UAE's quarterly economic report for December 2025.
The report highlights that the country's Gross Domestic Product (GDP) grew by 4.5% year-on-year in the third quarter of 2025. This growth was driven by a strong performance in the non-oil sectors, particularly in financial and insurance services, manufacturing, and construction.
The Central Bank of the UAE anticipates that the nation's economic growth will accelerate to 5.2% in the coming year, compared to the projected 5% for 2025. This expansion is expected to be supported by the non-hydrocarbon sector growing by 4.9% and the hydrocarbon sector returning to growth of 5.4%, fueled by faster-than-expected production cuts following OPEC+ quota increases.
Furthermore, the Central Bank has revised its inflation forecasts downward, predicting an inflation rate of 1.3% for 2025, down from the previous forecast of 1.5%. This adjustment is due to the persisting low trends in transportation costs and non-energy commodity prices. Inflation in the UAE stood at 1.1% in the third quarter of 2025.
The banking sector also continued its strong performance, with total assets increasing by 18.1% year-on-year to reach 5.2 trillion dirhams by the end of Q3 2025. The loan and deposit portfolios grew by 14.7% and 15.4%, respectively. Banks maintained strong capital levels, with a capital adequacy ratio of 17.4%, and asset quality improved as the non-performing loan ratio decreased to 1.6%.
The insurance sector also saw remarkable growth, with written insurance premiums and the number of policies increasing by 13.7% and 6.9%, respectively, in the third quarter of 2025.
The residential real estate market in the country also gained momentum during the first nine months of 2025, recording double-digit growth in the number of sales transactions, primarily driven by strong demand for residential apartments. Meanwhile, the capital markets delivered a strong performance in Q3 2025, with the Dubai Financial Market index rising by 37.9% year-on-year and the Abu Dhabi Securities Exchange index increasing by 8.7%.
