A team from the International Monetary Fund (IMF), led by Said Bakhache, concluded its 2025 Article IV Consultation with the United Arab Emirates (UAE) after discussions held in Abu Dhabi from September 17 to October 1, 2025.
In a statement at the end of the mission, Bakhache noted that the UAE has shown resilience to global uncertainty, regional conflicts, and fluctuations in oil markets. He said, “The UAE has shown strong resilience to global uncertainty, regional conflicts, and oil market volatility. Supported by sustained diversification and expanding exports, the UAE is projected to grow strongly, well above the global average in 2025. Following an estimated 4.0 percent growth in 2024, GDP is projected to expand by 4.8 percent in 2025, driven by robust non-hydrocarbon growth and a rebound in hydrocarbon output as OPEC+ production increases, accelerating further to 5.0 percent in 2026. Expansion in tourism, construction, and financial services continues to underpin growth, supported by major infrastructure projects. Inflation is projected at 1.6 percent in 2025 and around 2 percent over the medium term. Housing costs are expected to be the main source of price pressures, raising potential affordability concerns, while tradables remain subdued. Risks to the outlook are broadly balanced, underpinned by strong sovereign buffers and diversification efforts.”
Bakhache also commented on economic policy measures: “The UAE is expected to remain resilient to global policy uncertainty. Ongoing efforts to expand Comprehensive Economic Partnership Agreements will further bolster resilience and support diversification, while financial markets and capital flows continue to demonstrate resilience to global shocks, reflecting strong investor confidence. The current account balance strengthened further in 2024, driven by higher goods and services exports, especially non-hydrocarbon exports, and slower growth in imports.”
On fiscal matters he stated: “The UAE’s fiscal stance remains prudent. Fiscal policy is anchored in medium-term diversification and developmental objectives, with ample sovereign buffers to cushion against adverse shocks. The non-hydrocarbon primary deficit is expected to gradually improve over the medium term, supported by the implementation of the corporate income tax and other indirect tax reforms. While the emirates set their fiscal policies independently, their economic cycles are closely correlated due to strong interlinkages and exposure to common shocks. A wider scope for fiscal policy coordination between the federal and local governments would enhance consistency and lead to more effective policy making.”
Regarding financial stability he added: “The UAE’s financial sector remains strong and sound, supported by strong capital and liquidity buffers, improved asset quality, and conservative macroprudential policies. Banks remain profitable, with capital and liquidity ratios well above regulatory minimums and declining non-performing loan ratios. Credit to the private sector continues to grow while double-digit deposit growth has strengthened funding and lowered the loan-to-deposit ratio.” He also highlighted measures such as conservative loan-to-value ratios as helping mitigate risks.
Monetary developments were also addressed: “Enhancements to the Dirham Monetary Framework...are helping improve liquidity management...to further strengthen monetary policy transmission.” He mentioned progress on digital currency initiatives: “The UAE’s financial sector’s modernization is advancing steadily...with progress in rollout of Digital Dirham...and development of proactive new stablecoin regulations.”
On real estate trends Bakhache observed: “Real estate activity remains buoyant...Banks’ exposure...has gradually declined...while most transactions are self-financed...” but warned that continued vigilance was needed given possible changes in capital flows or investor sentiment.
He also commented on virtual assets regulation: “The UAE’s growing role as a global hub for virtual assets should be supported by continued strong coordination among regulators...” He welcomed efforts under anti-money laundering strategies that resulted recently in removal of enhanced monitoring requirements for the country.
Bakhache praised ongoing reforms aimed at economic diversification through investments in technology infrastructure as well as improvements made on data compilation practices.
“The IMF team would like to express its appreciation to authorities for open discussions,” he concluded.