World Bank Forecasts UAE Economy Growth Of 4.8% Driven By Digital Transformation

The World Bank's Gulf Economic Update (GEU) for Fall 2025 predicts a 4.8% growth in the UAE economy. The report, "The Gulf’s Digital Transformation: A Powerful Engine for Economic Diversification," highlights the UAE's balanced growth across oil and non-oil sectors. It also forecasts economic growth rates of 3.8% for Saudi Arabia, 3.5% for Bahrain, 3.1% for Oman, 2.8% for Qatar, and 2.7% for Kuwait.

The report identifies three key areas: economic diversification progress over the last decade, macroeconomic trends, and digital transformation focus. It notes moderate success in diversification efforts within GCC countries, with promising signs emerging recently. The rapid digital shift in the Gulf is evident through widespread AI adoption and advanced telecommunications infrastructure.

GCC countries have made significant strides in digital transformation, with over 90% 5G coverage and affordable high-speed internet access. Investments in data centres and high-performance computing are enhancing AI readiness, positioning the UAE and Saudi Arabia as regional and global leaders. This progress is bolstered by supportive ecosystems that include facilities, financing, and government use of generative AI applications.

Safaa El Tayeb El Kogali, World Bank Division Director for the GCC, emphasised that diversification and digital transformation are essential for long-term economic stability and prosperity. She highlighted the remarkable digital advancements in GCC nations due to robust infrastructure, growing computing power, and increasing AI skills.

The report examined economic diversification indicators over the past decade within GCC countries. While progress has been moderate overall, recent years have shown encouraging signs of improvement. The region's strong telecommunications networks support this advancement by providing extensive 5G coverage.

The report also noted that women's participation in STEM fields within the Gulf surpasses global averages, boosting the region's digital competitiveness. To maximise benefits from diversification and digital transformation, it recommended supporting SMEs in adopting AI technologies to enhance innovation.

Recommendations for Future Growth

To address labour-market challenges proactively while enhancing leadership potential in innovation, training programmes should be implemented to upskill workers. This approach aims to bridge labour-market gaps effectively while fostering an environment conducive to innovation-driven growth.

The GEU underscores that addressing environmental challenges alongside labour-market issues is crucial for maintaining leadership positions globally while ensuring sustainable development across all sectors involved in this transformative journey towards greater economic resilience through diversified strategies supported by cutting-edge technology integration efforts at every level possible throughout these dynamic economies today more than ever before seen anywhere else around our world today!

With inputs from WAM