Fitch Ratings Forecasts 8.5% UAE Economic Growth in 2027 Driven by Non-Oil Sector

Fitch Ratings has issued a new report, "The UAE’s Non-Oil Growth Model," projecting significant economic expansion for the UAE. The country's overall economy is expected to grow by 8.5% in 2027, largely propelled by a rebound in the non-oil sector, which is forecast to expand by 6.1% in the same year.

Key Growth Drivers

The ratings agency attributes this optimistic outlook to several core strengths:

• Strong Financial Position: The UAE's established economic framework and substantial financial resources, particularly Abu Dhabi’s sovereign wealth assets and fiscal strength, provide a robust foundation for recovery.
• Government-Led Investment: Increased government spending in Abu Dhabi, projected to rise by 19% in 2026, will focus on strengthening infrastructure and boosting investor confidence. Capital spending on strategic projects by the government and government-related entities is also expected to increase in 2026 and 2027.
• Business-Friendly Environment: The UAE's advanced infrastructure, global connectivity, competitive tax regime, and supportive government policies continue to attract international businesses and talent. The country ranks fifth globally in the IMD World Competitiveness Ranking.
• Population Growth: After an anticipated 1% decline in 2026, the UAE's population is forecast to grow by 2% in 2027 and 3% in 2028, driven by attractive employment, competitive salaries, long-term residency options like the Golden Visa (over 350,000 issued by 2025), and high quality of life.

Fitch expects the non-oil economy to be 2.2% larger in 2027 compared to 2025, recovering from a projected 3.7% contraction in 2026 due to regional geopolitical challenges. Overall real GDP growth is projected at 0.9% in 2026, accelerating to 8.5% in 2027, and moderating to 3.8% in 2028. The report highlights artificial intelligence, technology, financial services, and decarbonisation as sectors poised for growth through targeted government initiatives.

"The UAE’s structural advantages would continue to support the resilience of its non-oil economy."

Fitch affirmed the UAE’s sovereign credit rating at AA- with a Stable Outlook, with Abu Dhabi maintaining its AA rating, underpinned by its strong balance sheet and financial buffers.