UAE Economy Set To Grow 8.5% In 2027 As Strong Fundamentals Drive Recovery

(MENAFN- Khaleej Times) The UAE economy is forecast to expand by 8.5 per cent in 2027, supported by its strong financial position, resilient business environment and government-led investment, according to a new report by Fitch Ratings.

In its special report, The UAE's Non-Oil Growth Model, the ratings agency highlighted the country's structural strengths, including advanced infrastructure, global connectivity, supportive government policies and its ability to attract international businesses and talent.

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Fitch expects the UAE's non-oil economy to rebound by 6.1 per cent in 2027, following a projected contraction of 3.7 per cent in 2026 amid regional geopolitical challenges. Growth is forecast to reach 4.3 per cent in 2028, with the sector expected to be 2.2 per cent larger in 2027 than in 2025.

The agency said the UAE's established economic framework and substantial financial resources provide a strong foundation for recovery, particularly through Abu Dhabi's sovereign wealth assets, fiscal strength and ability to support economic activity.

Fitch expects Abu Dhabi's government spending to rise by 19 per cent in 2026, reflecting measures to support economic activity, strengthen infrastructure and reinforce investor confidence. It also projects fiscal surpluses exceeding 8 per cent of GDP annually through 2028, including investment income from the Abu Dhabi Investment Authority.

Fitch affirmed the UAE's sovereign credit rating at AA- with a Stable Outlook, while Abu Dhabi maintained its AA rating with a Stable Outlook. The agency said Abu Dhabi's strong balance sheet and substantial financial buffers continue to support the country's creditworthiness despite regional economic challenges.

The UAE's relatively low taxation of non-oil activities also limits the direct impact of slower non-oil growth on government finances.

Fitch expects the government and government-related entities to increase capital spending on infrastructure and strategic projects during 2026 and 2027, supporting economic activity, improving infrastructure resilience and helping restore business confidence.

The agency also expects further improvements to the UAE's operating environment, including streamlined administrative procedures for companies and residents.

Fitch identified artificial intelligence, technology, financial services and decarbonisation as sectors likely to benefit from targeted government initiatives. The country's advanced infrastructure, extensive international connectivity, competitive tax environment and established regulatory framework remain key advantages in attracting foreign investment.

The UAE ranked fifth among 69 economies in the IMD World Competitiveness Ranking, according to the report, reflecting the strength of its business environment. Fitch expects the country to retain its ability to attract international capital and skilled workers as regional conditions improve.

Population growth is also expected to support economic activity. Fitch forecasts the UAE's population to grow by 2 per cent in 2027 and 3 per cent in 2028, following an anticipated decline of 1 per cent in 2026.

The agency said attractive employment opportunities, competitive salaries, long-term residency options and quality of life continue to draw international professionals. It also highlighted the Golden Visa programme, noting that more than 350,000 visas had been issued by 2025.

Fitch expects the UAE's tourism and logistics sectors to recover gradually as regional stability improves and trade routes normalise.

Meanwhile, stronger oil production is forecast to contribute significantly to overall economic growth in 2027. Fitch projects total real GDP growth of 0.9 per cent in 2026, accelerating to 8.5 per cent in 2027 before moderating to 3.8 per cent in 2028.

Paul Gamble, Senior Director at Fitch Ratings, said the UAE's structural advantages would continue to support the resilience of its non-oil economy.

The report highlighted the country's ability to respond to economic shocks through supportive government policies, infrastructure investment and access to substantial sovereign capital.

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