Dubai continues to strengthen its position as a key driver of non-oil growth in the Gulf region, supported by a moderate inflation environment, increased domestic spending, and a surge in tourism, according to a recent report from Emirates NBD. The report highlights that the general inflation level in Dubai is conducive to economic activity, enhancing purchasing power stability and encouraging both investment and private consumption.
As one of the leading cities in the Gulf, Dubai reaps the benefits of consistent population growth and an expanding consumer base, alongside robust tourism activity. The report forecasts that the non-oil economy in the UAE will grow by 4.7% in 2025, driven by these factors, along with advancements in infrastructure and expansion in sectors such as technology and services.
The report also noted a relative stability in food and beverage prices in Dubai, with some months experiencing actual price drops due to improvements in global supply chains and decreased shipping costs. This decline has alleviated consumer burdens and boosted local demand.
In the transportation sector, the report presented an additional advantage for the UAE in comparison to other regional countries, as a global decrease in fuel prices has directly impacted the local market, leading to a 5.1% reduction in transportation costs in Dubai during the first half of 2025. This reduction has helped stabilize overall prices and enhance the competitiveness of operational sectors.
While housing prices remain elevated, they reflect a strong demand and vibrant real estate activity in the emirate. Continued growth momentum in Dubai is anticipated, driven by ongoing population expansions and significant investments across various sectors.
The report indicates that the Gulf region, in general, benefits from a moderate inflationary environment that supports non-oil economic activity within a framework of financial stability and prudent monetary policies. The average inflation rate in the Gulf Cooperation Council (GCC) countries was about 1.3% in the first half of 2025, one of the lowest rates globally, which has contributed to boosting consumer confidence and encouraging local spending.
Positive growth in the non-oil sector is expected across several Gulf nations in 2025, propelled by population increases, expansion in tourism and services sectors, as well as government spending. The report also emphasizes that Saudi Arabia, Qatar, and the UAE will be among the primary non-oil growth engines in the region in the upcoming phase, benefiting from major development projects and accelerated economic diversification plans.