UAE is the most diversified and second largest economy in the Gulf. The government of UAE prioritizes economic diversification in order to promote non-oil growth. The country significantly reduced its reliance on oil from 90% in 1970 to 34% at present.

UAE GDP by year

Source: IMF World Economic Outlook

UAE economy has maintained positive growth levels despite a decline in oil prices. The IMF predicts that UAE’s GDP will reach $400 billion by 2018.

It is expected that UAE’s economic growth will pick up significantly in 2018, driven mainly by the construction sector as preparations gain speed for the World Expo 2020 in Dubai. The Expo will likely boost the tourism industry and ensure continued double-digit growth rates.

UAE GDP composition by sectors (2015)

Source: UAE Ministry of Economy

The IMF projected growth for the UAE of 3.4% for 2018. Standard Chartered also expects the UAE economy to grow by 3.5% in 2018.

UAE Real GDP Growth

Source: IMF World Economic Outlook

UAE started implementing a value added tax (VAT) rate of 5% on goods and services from January 2018. BMI Research predicts that UAE will see the most positive effect of all GCC states from the introduction of VAT.

GCC countries by GDP (2016)

Source: IMF World Economic Outlook

It is expected that the Gulf Cooperation Council (GCC) region’s economy will grow around 2% in 2018, supported by the partial recovery in oil prices.