IMF visited Gulf this week

Commends UAE economy

Risks from real estate tokenisation

International Monetary Fund officials this week commended the UAE’s economic performance during a period of widespread global volatility, and pointed to real estate and virtual assets as areas in need of close monitoring.

Growth is expected to be faster in the Emirates this year than regional and global averages, according to Said Bakhache, the IMF mission chief for the UAE who led an onsite visit to the Gulf state this week.

Government investments in technology, infrastructure and services are helping to further improve the business climate and bolster diversification efforts, he said, in a press release.

“Climate adaptation, water management and food security should also remain long-term policy priorities,” Bakhache added. “The UAE’s rapid emergence as a global AI hub offers significant opportunities.” 

Gross domestic product is expected to grow by nearly 5 percent in 2025 and a full 5 percent next year, after expanding an estimated 4 percent in 2024. 

A rising non-oil economy, driven by tourism, construction and banking, is supporting this growth, along with increasing oil production amid the unwinding of two-year-old output cuts from Opec+, according to Bakhache. 

UAE economic indicators at a glance

As trade uncertainty roils international commerce, the UAE’s current account balance benefited from more exports and fewer imports last year, Bakhache said. He welcomed authorities’ push to sign comprehensive economic partnership agreements with more foreign counterparts. 

“Ample sovereign buffers,” well capitalised banks, and “strong and sound” financial management also provide robust cushions against possible external shocks.

Inflation is subdued, but the mounting cost of housing could put upward pressure on prices and create affordability challenges in the future. However, banks’ exposure to real estate has fallen as most purchases are self-financed. This limits systemic risks, Bakhache said.

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“Nonetheless, continued vigilance is warranted, as the sector could be affected by a reversal of capital flows and changes in investor sentiment,” he added. “Potential risks from real estate tokenisation and its broader macroeconomic implications should also be carefully assessed.”

The Emirates’ transformation into an international centre for virtual assets requires “strong coordination” by regulators to ensure the crypto industry is safe and healthy.

“Ongoing efforts to continue alignment with international regulatory standards and strengthen supervisory capacity are welcome and will be critical to safeguarding financial stability while promoting responsible innovation,” Bakhache said.