The S&P Global report from February projected the UAE to achieve 4.7 percent real GDP growth this year with nearly three-quarters of the increase coming from non-oil sectors. Dubai’s private sector activity, Abu Dhabi’s infrastructure investments and major tourism and entertainment projects in the northern emirates are expected to support the non-oil momentum according to the assessment. The UAE’s fiscal balance is seen remaining in surplus at 2.3 percent of GDP alongside a double-digit current account surplus that aligns with its AA stable sovereign rating reaffirmed by S&P Global Ratings in late 2025.
S&P Global anticipated overall Middle East GDP growth of approximately 3.5 percent in 2026 slightly above the previous year’s level despite lower oil prices and geopolitical risks. Higher hydrocarbon output together with stronger non-oil economies in the UAE and Saudi Arabia plus new LNG production in Qatar would contribute to the regional performance the report indicated. The region’s average sovereign credit rating has risen over the past two years as governments introduced VAT and corporate taxes adopted transparent budgeting and implemented reforms that lowered vulnerability to oil price fluctuations S&P Global found.
Bahrain and Oman show greater fiscal sensitivity to extended periods of low oil prices although Oman’s reforms have improved its standing substantially according to S&P Global. Kuwait despite a projected fiscal deficit of 9 percent of GDP this year holds sovereign assets estimated at more than 500 percent of GDP one of the world’s largest such pools that bolsters its ability to withstand shocks the assessment stated. These differences highlight the varied fiscal positions across the Gulf Cooperation Council states.
Geopolitical tensions have stayed high following escalation that started in 2023 yet the S&P Global report concluded that Gulf credit and financial systems have proven able to absorb shocks without broad instability. Baseline forecasts for 2026 do not factor in a full-scale regional conflict and major disruptions to credit are viewed as unlikely unless the situation deteriorates sharply. Bahrain Saudi Arabia and Qatar with their external financing needs could encounter pressures from bank foreign liabilities in times of uncertainty though regional support frameworks limit the risks S&P Global noted.
Foreign direct investment into the Middle East is forecast to remain weak this year due to the geopolitical environment as detailed in the S&P Global study. Saudi Arabia’s Vision 2030 diversification has made progress but continues to depend largely on public funds and borrowing according to the report. The Saudi fiscal deficit is expected to decline to 4 percent of GDP with higher oil production and non-oil revenue while interest costs have more than doubled since 2019 and domestic banks’ foreign liabilities have tripled since 2022.
The region is entering this year better prepared to manage shocks than in earlier periods thanks to larger sovereign buffers more adaptable fiscal policies and structural reforms the S&P Global report emphasised. For the UAE broad-based growth and stable finances single it out as among the most robust economies in the area with its sovereign rating and outlook reflecting that strength.
A Reuters report on the IMF’s April update said the Middle East and North Africa growth estimate for 2026 was cut to 1.1 percent with the UAE at 3.1 percent. IMF data places the non-oil sector at 77.3 percent of UAE GDP.
