The UAE economy’s growth is driven by non-oil sector activity and rising oil production
The UAE is projected to sustain a solid economic growth rate of around 4 percent annually from 2025 to 2028, supported by continued strength in the non-oil economy and a rebound in oil production, S&P Global has announced.
Despite external challenges such as global economic slowdowns and lower oil prices, growth will be underpinned by consistent fiscal surpluses at both the federal and emirate levels. This growth is driven by non-oil activity and normalization of oil production.
Fiscal surpluses are projected to average 3.2 percent of GDP, with net public sector asset position expected to reach 177 percent of GDP by 2028, the report added.
Sovereign credit strength
On June 17, 2025, S&P Global Ratings assigned the UAE a sovereign credit rating of ‘AA/A-1+’ with a stable outlook, citing robust fiscal and external positions. The transfer and convertibility assessment is rated ‘AA+’, underscoring the UAE’s macroeconomic strength.
The UAE is expected to maintain strong fiscal and external positions through 2028, on the back of prudent policy, high liquidity buffers, and diversified growth. However, risks include rising interest burdens and declining per capita wealth.
Fiscal surpluses to average 3.2 percent of GDP
The UAE’s fiscal indicators point to continued stability, with the debt-to-GDP ratio projected to remain stable at around 27–28 percent through 2028. The primary balance is expected to stay positive, having peaked at 10.5 percent in 2022, reflecting strong fiscal discipline.
Meanwhile, revenue as a share of GDP is projected to decline from 31 percent in 2019 to 24.6 percent by 2028, suggesting a shift in revenue composition and spending priorities.
Despite this decline, the UAE’s net debt-to-GDP ratio is expected to improve, moving from 8.7 percent in 2019 to 11.1 percent in 2028, underscoring a strengthened fiscal position supported by substantial sovereign assets.
Economic diversification in focus
The UAE continues to make significant progress in economic diversification, with non-oil sectors now comprising approximately 75 percent of GDP.
Key growth areas include tourism, manufacturing, and digital services. Major development initiatives such as the Saadiyat Cultural District and the upcoming Disney Park in Abu Dhabi, along with 27 Comprehensive Economic Partnership Agreements (CEPAs), are expected to boost economic momentum.
Debt management and fiscal strategy
Government debt is expected to remain manageable, with total debt issuance projected at $18 billion in 2025. Fiscal strategy remains aligned with Vision 2031, focusing on capital market development and efficient public spending.
The UAE’s banking sector is expected to stay resilient, benefiting from a strong non-oil economy, a stable monetary environment, and sound capital buffers. Banks maintain a net external asset position, with stable asset quality supported by anticipated interest rate cuts.
Geopolitical risk and strategic positioning
While regional tensions could weigh on Gulf economies, the UAE’s large sovereign wealth, economic diversification, and strategic alliances are expected to buffer against shocks.
Macroeconomic indicators (2019–2028)
- Nominal GDP to increase from $418 billion (2019) to $657 billion (2028)
- GDP per capita peaked at $48,900 (2022), projected at $47,300 (2023)
- Real GDP growth peaked at 7.5 percent in 2022; forecasted at 3.0 percent in 2028.
- Investment/GDP to rise from 22.0 percent in 2023 to 26.3 percent in 2025.
Ratings and credit assessment snapshot
- Institutional Assessment: 3 – Strong policy environment, moderate transparency
- Economic Assessment: 1 – High per capita income
- External Assessment: 2 – Positive outlook, though federal data disclosure remains limited
- Fiscal Flexibility and Performance: 1 – Strong liquid asset base and fiscal discipline
- Monetary Assessment: 4 – Stable currency peg, low inflation
External accounts and reserves
The UAE’s external position remains robust, with the current account balance expected to exceed 10 percent of GDP through 2025. Usable reserves are forecast to rise substantially, reflecting strong export earnings and disciplined external borrowing.
Trade balance/GDP to moderate from 19.3 percent in 2019) to 7.8 percent in 2028.
Short-term external debt (remaining maturity) to stabilize around 45.4 percent by 2028.
Focus on economic diversification
In 2023, steel and aluminum made up 4.3 percent of the UAE’s total non-oil exports, with approximately $1.4 billion worth of related products —equivalent to 0.3 percent of GDP — exported to the United States.
At the same time, the UAE has introduced key structural reforms aimed at enhancing its business environment. Notably, a new foreign direct investment law now allows full foreign ownership across a range of sectors.
Complementary legal reforms, including liberalization of personal and family laws, further strengthen the country’s appeal to international investors and professionals.
The Golden Visa Program has also become a cornerstone policy for talent retention, offering long-term residency to investors, entrepreneurs, and highly skilled workers.
These initiatives are expected to boost labor market flexibility, attract increased foreign investment, and support higher inflows of skilled expatriates.
However, these benefits will be balanced by ongoing efforts to implement workforce nationalization policies, particularly through the Emiratization program.
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