Today's Edition
A.SREENIVASA REDDY (ABU DHABI)
Fitch expects the UAE to post another year of robust economic growth in 2026, with real GDP forecast to expand by 5.7%, supported by higher oil output and sustained public spending, before moderating to 4.3% in 2027.
In its half-yearly credit brief, Fitch assumes Brent crude will average $63 per barrel in 2026, down from $69 per barrel in 2025.
The breakeven oil price for the UAE is forecast at $35 per barrel for both 2026 and 2027, according to Fitch Ratings sources who spoke to Aletihad.
For Abu Dhabi, the fiscal breakeven crude price is projected at $35 per barrel in 2026 and $38 per barrel in 2027. In 2025, the breakeven price stood at $43 per barrel, Fitch Ratings said.
Fitch said its baseline oil price of $63 per barrel “should be sufficient to sustain continued strong public capex”, underpinning steady earnings for corporates, particularly in energy and infrastructure, and supporting diversification efforts.
Macroeconomic indicators remain strong. CPI inflation in the UAE is projected at 1.7% in both 2026 and 2027 . The general government surplus is forecast at 5.7% of GDP in 2026 and 5.5% in 2027, while the current account surplus is expected to remain elevated at 12.2% of GDP in both years.
On funding conditions, Fitch expects corporate debt market activity in the GCC to expand in 2026, including in the UAE, as issuers fund expansionary capex and undertake liability management exercises.
“There are no material maturities due in 2026-2027 among higher-rated Fitch-rated GCC companies and refinancing risk remains modest for most companies,” the report said.
While bank financing remains the dominant funding source for corporates, capital market activity has been notable, especially in Saudi Arabia and the UAE, with sukuk remaining the preferred instrument for most rated issuers.
UAE sukuk issuance reached $25 billion in 2025, while total debt capital market issuance stood at $169.3 billion, placing the UAE among the leading issuers in the GCC. In 2024, sukuk issuance totalled $14.4 billion, with overall debt capital market issuance amounting to $152.1 billion.
Issuance volumes are expected to remain solid in 2026–2027 amid robust investor demand and easing interest rates.
Domestic liquidity conditions are projected to remain supportive. Fitch said an oil price of $63/bbl should drive sufficient deposit growth to fund lending expansion across GCC banking systems. The agency expects the US Federal Reserve’s policy rate to decline to 3.25% by end-2026, which would ease funding conditions across the dollar-pegged GCC economies.
Across the wider GCC, Saudi Arabia’s real GDP growth is projected at 5% in 2026 before slowing to 3.5% in 2027, while Qatar’s growth is forecast to accelerate to 4.1% in 2026.
Fitch believes the UAE is well positioned to weather weaker oil prices in 2026, supported by low breakeven levels and strong public finances.
