UAE Economy 2025: Booming Growth, Rising Petrol Prices and a Tougher New Rulebook

The UAE enters the end of 2025 as the Gulf's expansion engine: growth forecasts are being revised up, Abu Dhabi is positioning itself as a global capital for hedge funds and green finance, and a fresh wave of IPOs is lining up on Dubai and Abu Dhabi exchanges. At the same time, households are watching petrol prices nudge higher again, while businesses brace for stricter tax and compliance rules that will kick in over the next 12–18 months.

Growth still outpacing the Gulf

The Central Bank of the UAE has upgraded its outlook and now expects the economy to grow around 4.9% in 2025 and 5.3% in 2026, driven by both oil and non-oil sectors. Non-oil activity alone is forecast to expand by roughly 4.5% in 2025 and 4.8% in 2026, with manufacturing, real estate, construction and financial services doing much of the heavy lifting.

Private forecasters are even more bullish: some estimates now put UAE real GDP growth at about 5.2% in 2025, accelerating further in 2026 as OPEC+ constraints are rolled back and diversification investments kick in. Abu Dhabi, in particular, is seeing strong momentum: its Q2 2025 real GDP grew 3.8% year-on-year, with non-oil GDP up 6.6% and accounting for more than half of the emirate's output.

For companies on the ground, this translates into a mixed but broadly positive reality. Demand is strong in construction, logistics, tourism, tech, AI and finance. But the same growth that brings opportunity also brings wage pressure, higher rents and more competition for talent.

Abu Dhabi's big bet: from regional hub to global capital magnet

Abu Dhabi is not hiding its ambitions. Abu Dhabi Finance Week is gathering global CEOs, asset managers and policymakers on Al Maryah Island to showcase the emirate's rise as a financial centre. At the same time, the newly approved FIDA cluster – focused on finance, innovation, digital assets and AI – is designed to create an integrated ecosystem for capital and technology. By 2045, the cluster is projected to add around AED 56 billion to Abu Dhabi's GDP, attract at least AED 17 billion in investment and create roughly 8,000 skilled jobs.

Global hedge funds are already voting with their feet. Firms such as Balyasny Asset Management and Man Group are applying for licenses and setting up in Abu Dhabi Global Market, joining a growing list of heavyweights including Brevan Howard, Marshall Wace and Rokos Capital. The attraction is obvious: access to sovereign capital, a favourable tax environment and a time zone that works for both Asia and Europe.

For the UAE financial sector, this is a structural shift. More hedge funds and asset managers mean deeper capital markets, more liquidity and more specialised jobs. For local businesses – from law firms and consultants to fintech and AI startups – it means a bigger pool of potential clients and partners. For residents, it means more high-skill employment but also upward pressure on housing and services in key districts of Abu Dhabi and Dubai.

Energy strategy: LNG ambitions and the petrol price reality

On the energy front, the UAE is playing a long game. The government has announced plans to significantly increase liquefied natural gas (LNG) exports to meet surging global demand, with ADNOC's international arm targeting 20–25 million metric tonnes of gas and LNG capacity by 2035. The logic is clear: global energy demand remains robust, AI and data centres are power-hungry, and LNG is seen as a "bridge fuel" in the transition to cleaner energy.

But while LNG strategy unfolds on a 10- to 15-year horizon, residents feel energy policy most directly at the petrol pump.

Comparison of Special 95 petrol prices across 2025

The UAE sets fuel prices monthly based on global oil markets and local policy. Special 95 – a common benchmark for everyday drivers – has moved within a relatively narrow band this year, but the cumulative effect matters for commuting, logistics and inflation.

From January to December, Special 95 has ranged roughly between AED 2.46 and AED 2.66 per litre, with a modest uptick in the final months of the year. December petrol prices – AED 2.58 for Special 95, AED 2.70 for Super 98, AED 2.51 for E-Plus 91 and AED 2.85 for diesel – are slightly higher than November, reflecting global market moves.

For logistics firms, ride-hailing platforms and delivery services, these monthly adjustments directly hit operating costs and margins. For households, especially those with long commutes, the difference between AED 2.46 and 2.66 per litre adds up over a year – even if the UAE's fuel remains competitive compared with many other countries.

A tougher rulebook: VAT reforms, e-invoicing and Emiratisation crackdowns

Parallel to the growth story, the UAE is quietly but aggressively tightening its regulatory framework.

• Revised VAT rules from 2026: New VAT regulations, effective from 1 January 2026, will streamline procedures, enhance transparency and align the UAE more closely with international best practice. Businesses can expect clearer rules but also less room for error.

• Mandatory e-invoicing: From July 2026, all invoices, credit notes and system notifications must be issued electronically, with penalties up to AED 5,000 for non-compliance. This will force SMEs and larger firms alike to upgrade their accounting and ERP systems.

• Emiratisation enforcement: Between January and June 2025, authorities fined over 1,300 firms a total of more than AED 34 million for manipulating Emiratisation requirements, including creating fake jobs. The message is blunt: Emiratisation is no longer a box-ticking exercise.

For companies, this means higher short-term compliance costs – new software, training, internal audits – but also long-term benefits: cleaner books, easier access to bank financing and a better standing with regulators. For finance professionals, demand will grow for tax specialists, systems integrators, internal auditors and compliance officers.

IPO pipeline and capital markets momentum

On public markets, the UAE is still riding the IPO wave that started in 2022. Analysts expect UAE IPOs to raise around $6 billion in 2025, with flagship offerings anticipated from Etihad and Dubizzle. Both Dubai Financial Market (DFM) and Abu Dhabi Securities Exchange (ADX) continue to promote new listings and broaden their product range, from equities and sukuk to ETFs and REITs.

For regional and international investors, the combination of strong macro growth, ambitious state-linked companies, and a maturing regulatory environment is attractive. For local businesses, capital markets offer an alternative to bank lending – but with stricter disclosure, governance and board diversity requirements.

What it all means for businesses and everyday life

Put together, 2025 in the UAE looks like this: strong growth, deeper capital markets and an increasingly sophisticated financial hub – layered on top of higher expectations for transparency and compliance, and a slowly but steadily rising cost base in areas like fuel, housing and wages.

For businesses, the playbook is clear: invest in digital infrastructure (especially for e-invoicing and tax), take Emiratisation seriously, and think strategically about financing – whether via banks, private capital or the IPO route. Those that adapt quickly will find themselves operating in a larger, more liquid and more global market.

For the financial sector, Abu Dhabi's rise as a hedge fund and asset management hub, combined with Dubai's role in capital markets and fintech, sets the stage for the UAE to compete not just with regional centres, but with established global hubs.

For residents, the picture is more nuanced. Job opportunities are broadening, especially for skilled professionals in tech, finance, energy and compliance. But higher living costs – from school fees and housing to fuel and services – mean that income growth needs to keep up.

The bottom line: the UAE in 2025 is not just growing; it is maturing. More rules, more scrutiny and slightly higher prices – but also more opportunity, more capital and more global relevance. For investors, entrepreneurs and everyday families, the question is no longer whether the UAE is a place of growth. It is whether you are positioned to grow with it.