A. SREENIVASA REDDY (ABU DHABI)
The UAE economy is expected to recover strongly in 2027, supported by elevated oil prices, increased hydrocarbon production, and investment in energy infrastructure, according to S&P Global Ratings’ latest assessment of global sovereign credit trends.
The ratings agency expects UAE real GDP growth to accelerate to 6.73% in 2027 and 6.24% in 2028, after slowing to 1.45% in 2026. The economy grew by 6.23% in 2025, according to figures published by S&P Global Ratings.
The recovery is expected to be particularly strong in Abu Dhabi, whose economy grew by 5.22% in 2025 and is forecast to expand by 2.25% in 2026. Growth is projected to accelerate to 8.34% in 2027, before moderating to 7.82% in 2028 and 6.56% in 2029.
Elevated oil prices are expected to support the UAE’s fiscal and external revenues. The country was among the Gulf hydrocarbon exporters that maintained higher exports during the conflict, the agency said.
“We anticipate that still elevated oil prices will support fiscal and external revenue, benefiting Saudi Arabia, the UAE and Oman — which have maintained higher exports during the conflict,” S&P Global Ratings said.
The agency expects domestic investment in energy and utility security, including pipelines and storage facilities, to provide further support for growth.
Inflation remained contained despite the geopolitical and energy-market pressures. UAE consumer price inflation eased to 1.25% in 2025 from 1.66% in 2024. In Abu Dhabi, inflation stood at 0.28% in 2025. S&P Global Ratings has previously said it expects inflation in the emirate to remain modest at about 1.5% through 2029.
The conflict has also accelerated national strategic objectives across the Gulf, including measures intended to strengthen energy security and increase returns from hydrocarbon resources.
“For example, the UAE has stated its intent to increase oil production toward capacity following its exit from OPEC,” the agency said.
S&P Global Ratings’ base case assumes that intermittent clashes between Iran and the US will produce short-term volatility, followed by a strong economic recovery across the GCC in 2027, supported by elevated oil prices. Its assumptions include a gradual reopening of important transport routes during 2026, increased regional hydrocarbon production and continued economic diversification.
However, the agency warned that prolonged uncertainty and renewed military hostilities could weaken business confidence, private-sector activity, foreign direct investment and longer-term growth.
Supply-chain disruption remains another risk. S&P Global Ratings said non-oil logistics centres such as Dubai’s Jebel Ali port could face higher operating costs as trade flows adjust to the security situation.
“GCC sovereigns and banks continue to demonstrate resilience supported by strong balance sheets, fiscal flexibility and a substantial net asset position,” the agency said.
It added that the regional tensions were producing structural changes across the GCC, including greater investment in energy security, alternative trade routes, and domestic industrial capacity.