The increase in federal government spending in the UAE contributes to the continuation of the country’s economic growth during 2025, while strategic policies and government initiatives consolidate the promotion of this growth, which aim to enhance economic diversification and attract foreign investments, as the UAE government approved a federal budget for the year 2025 with an increase of approximately 12% in spending, reaching 71.5 billion dirhams, with about 40% allocated to social development and pensions, including education and health care.
During the 2025 budget, Abu Dhabi is expected to continue increasing annual spending on non-oil sectors, which include renewable energy projects, infrastructure and industry, as well as various service sectors, which will contribute to attracting foreign investments, as Fitch previously expected that government spending for the Emirate of Abu Dhabi would range For the year 2024, between 260 billion and 300 billion dirhams, and that the emirate achieves a financial surplus of 5.4% of the GDP in 2024.
Dubai announced an expansionary budget for the years (2025-2027), with a total expenditure of 272 billion dirhams, with a large percentage allocated to infrastructure projects, while the Emirate of Sharjah adopted the largest general budget in its history with total expenditures amounting to about 42 billion dirhams, and the Ajman government also approved the budget. For the year 2025, at a value of 3.7 billion dirhams.
The Abu Dhabi-based Interregional Center for Strategic Analyzes confirmed that the UAE budgets for 2025 aim to support economic growth through several main axes, including increasing government spending on infrastructure projects, stimulating non-oil sectors, enhancing social services, and spending on technology, industry, and clean energy. This reduces dependence on the oil resource and enhances the sustainability of growth. It also works to achieve a financial surplus that contributes to macroeconomic stability and enhances confidence in the business environment.
According to reports from the International Monetary Fund and the World Bank, the UAE is expected to achieve an economic growth rate ranging between 4% and 6% during the year 2025 thanks to expansionary policies in its budgets, and international financial institutions agree on these positive expectations, as the International Monetary Fund raised its expectations for the growth of the country’s real gross domestic product. UAE in 2025 to 5.1%, while the Arab Monetary Fund expects growth of 6.2% for the same year.
Interregional indicated that these expectations are based on several factors, most notably: the UAE’s endeavor to strengthen non-oil sectors, such as tourism, transportation, financial services, insurance, construction, and real estate, which contributes to achieving sustainable growth and expanding the network of economic partnerships to increase trade exchange and attract investments, which It enhances economic growth opportunities and focuses on developing advanced technology and artificial intelligence sectors, which contributes to enhancing productivity and stimulating economic growth.
The most prominent growth factors for the UAE economy during 2025 include political stability and a stimulating legislative environment with continued supportive economic policies to attract investors and entrepreneurs from around the world, strengthening the financial sector through advanced banking services, in addition to supporting Islamic finance and financial markets.
He explained that expectations indicate that the UAE economy will witness remarkable growth in non-oil sectors during the year 2025, and the most prominent of these sectors is tourism and hospitality, as it is expected that the tourism and hospitality sector will continue to achieve strong growth, supported by global events and advanced infrastructure, as the sector’s contribution to the economy currently reaches Approximately 13% of the gross domestic product.
The trade sector is at the forefront of sectors expected to achieve significant growth rates during 2025, as the UAE seeks to expand its foreign trade to 25.6 trillion dirhams by 2033, which indicates continued growth in this sector.
The transportation and aviation sector represents one of the most thriving sectors and an increase in air traffic during the current year, while the aviation sector contributes about 15% of the gross domestic product.
The financial services and insurance sector is expected to continue to grow thanks to supportive government policies and attracting foreign investments. It is also expected that there will be significant growth in the construction and real estate sector with the continuation of huge construction projects and infrastructure development. The communications and technology sector is also one of the sectors that will achieve growth during the year 2025, with a focus on Digital transformation and innovation.
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