While 2024 was a year of experimentation, 2025 holds potential for boosted economic growth with technological  transformation, increased labour force participation, changing workplace dynamics, and the implementation of revamped policies. 

What is the economic outlook for the Middle East?

An Outlook 2025 report by Mastercard states that the Middle East and Africa will see continued and sustainable economic growth, driven by strong non-oil GDP growth in the Gulf nations. This GDP growth will be backed by continued investments in both private and public sectors. Additionally, the lowering of policy rates by the central banks due to macroeconomic adjustments in the emerging markets like Egypt and Turkey will boost the economy, leading to faster growth in 2025 and beyond. And tourism stands out as the key sector driving this economic boost. Another reflection from the report is that the Gulf nations will see a jump of 1.8 per cent in their economic growth, despite lower oil prices.

This strong economic outlook in 2025 will also be driven by increased women labour force participation, which recently saw a boost. Women returning to work has a larger impact on the region's economic growth. As the latest World Bank data shows that women’s representation in the UAE workforce stands at 55.4 per cent. 2025 will be known as the great return of women to the workforce. This can also be understood as more jobs are being created in sectors that have more women, like healthcare, luxury goods, education etc. Additionally, the rise of flexible and remote working options is providing better opportunities to women as they continue to be the primary caregivers. This flexibility enables them to balance their work and personal life. These trends will likely continue in 2025, helping the economy by increasing household income and boosting consumption.

Key drivers of economic growth in 2025

As we reflected on big moments in 2024, we observed that key factors that will continue to shape the years ahead. They are: 

Technological implementations: In 2025, industries will play around with technology but with carefulness. The leaders continue to emphasise how Artificial Intelligence (AI) automation will continue to transform the world of work and talent globally. Though challenges of ethical usage persist, the leaders will have thoughtful considerations of using technology and its effective implementation. Even in recruitment, the latest Future Health Index 2024 report reflected that over 90 per cent of Saudi Arabian healthcare leaders plan to use technology so they can automate repetitive tasks or processes to address talent shortages in the healthcare industry. It also stated that regional leaders are more inclined towards Gen AI investments than their global counterparts. 

Akram Sirafy, General Manager, Philips Saudi Arabia underlined how leaders across the region are seeking better technology utilising AI to analyse data and draw actionable insights, saying, “healthcare leaders are looking to partnerships to overcome system limitations. Improving care coordination and enhancing technology integration and interoperability are among the top drivers for collaboration, to realise a more structured and innovative form of healthcare.”

Flexibility: The year 2024 emphasised flexibility in the workplace. Organisations embraced new ways of working such as four-day work week, reduced working hours, as well as remote and hybrid working arrangements. And the results showed that flexibility definitely raised happiness index in workplaces, fostering a healthier work-life balance. Flexibility also works really well with the region’s agenda for better quality of life. 

As Muhammad Laghari emphasised, "Flexible work arrangements, combining remote and in-office setups, will become the norm in 2025. This shift will challenge traditional workplace cultures and necessitate new approaches to collaboration, communication, and performance management."

Talent mobility: As the region draws attention to global talent, it also attracts a greater flow of financial resources, such as investments, remittances, and other capital. The global talent brings their expertise, better practices, creativity and innovation. This also motivates the nations to increase investments in education, training, and innovation, leading to capital inflows in sectors like technology, research, and development. Organisations are taking advantage of this talent mobility, as they continue to grapple with skill shortages across industries. They must rethink ways to tapping into the global talent pool and foster an environment where the talent can thrive.

As Tarik Chebib reflected, "The Middle East region as a whole has become very attractive to global talent, with the UAE and KSA leading the charge. In Saudi Arabia, Vision 2030 is driving the need to diversify away from the oil and gas sectors. Many key industries are receiving significant government funding, new companies are being established, and talent is being attracted to the region. Regulations also encourage companies to set up their headquarters in Saudi Arabia. It’s an attractive proposition for many. 

Meanwhile, the UAE offers its own unique advantages, such as a high quality of life, better healthcare, and other initiatives that attract tech companies, startups, and global talent to the region. For tech professionals, in particular, who can work from anywhere, it's important that their downtime is well spent. Work-life balance matters more than ever. The UAE offers the kind of lifestyle that aligns with these values."

Diversity taking centre stage: Women in the Gulf nations are being motivated to join the workforce, and continue working while juggling personal responsibilities, all due to flexible work arrangements with better support system. Additionally, upskilling opportunities enables them to find better jobs, so they can escalate to leadership roles, and not just in female dominated industries. Furthermore, the newly improved policies are supportive of women workers in the Gulf – linked to better quality of life without compromising on the women’s career life.

Nelson Danam, Principal, Global Financial Services at Arthur D. Little, Middle East underlined, "In markets like KSA, where national transformation goals are reshaping industries, prioritizing employee experience is seen as essential to building a motivated and future-ready workforce. Key initiatives are focused on increasing female workforce representation to 22 per cent by 2025, aligning with Saudi Vision 2030 goals, and achieving a resilient and diverse workforce. Today we see key trends shaping EX such as the integration of AI, the rise of hybrid work models, and the increasing focus on diversity and well-being, being rolled out in KSA. Leaders acknowledge that bold shifts toward people-centric cultures and authentic workplaces, will make their organisations ready to attract and retain top talent.”

The current ruler of Dubai, H.H Sheikh Mohammed bin Rashid Al Maktoum also reflected the nation’s economic growth, and underlined the factors influencing this boost in 2024 saying, “By the grace of God, the team successfully updated 80 per cent of the country’s economic, social, and regulatory legislation, creating a better environment for growth.

As a result, the number of new companies in 2024 jumped to 200,000, and our foreign trade exceeded 2.8 trillion dirhams for the first time. Additionally, foreign direct investment is expected to reach 130 billion dirhams for the first time, and the value of our industrial exports is projected to hit 190 billion dirhams, also for the first time…. Over 140 international agreements were signed during 2024 in various fields, including the economy, sustainability, clean energy, technology, artificial intelligence, security and defense, international humanitarian work, and more.” 

He also underlined how the tourism industry is key driving force behind this economic boost adding, “In 2024, 150 million travelers passed through our airports, and our tourism facilities welcomed over 30 million guests”

وفي نفس العام مر عبر مطاراتنا 150 مليون مسافر … واستقبلت منشآتنا السياحية أكثر من 30 مليون نزيل

وفي نفس العام أطلق شبابنا المواطنين 25 ألف شركة صغيرة ومتوسطة دخلت في الدورة الاقتصادية في الدولة .. وتضاعف أعداد المواطنين في القطاع الخاص 350% ، ليصل 131 ألف مواطن لأول مرة بفضل… pic.twitter.com/N5udraPKfK

— HH Sheikh Mohammed (@HHShkMohd) January 2, 2025

He also highlighted Emiratization as the key in private sector growth, “Emirati youth launched 25,000 small and medium enterprises that became part of the country’s economic cycle. The number of Emiratis in the private sector increased by 350 per cent, reaching 131,000 citizens for the first time, thanks to the "Nafis" national program.