UAE’s consolidated budget to remain in surplus in 2026, says Fitch

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In its latest rating action, Fitch affirmed the UAE at AA- with a ‘Stable Outlook’, thanks to the UAE’s low consolidated government debt, strong net external asset position and high GDP per capita

The UAE’s consolidated budget is expected to remain in surplus for the remainder of the year at 4 per cent of the gross domestic product, according to Fitch Ratings, despite an almost 20 per cent rise in spending to mitigate war impact.

The credit ratings agency forecasts consolidated UAE government debt to rise to 22.8 per cent of GDP in 2026, from 22.6 per cent of GDP at end-2025, which was well below the 'AA' category median of 45 per cent.

In its latest rating action, Fitch affirmed the UAE at AA- with a ‘Stable Outlook’, which the credit ratings agency said reflects the UAE’s low consolidated government debt, strong net external asset position and high GDP per capita.

Abu Dhabi, also rated as ‘Stable’, has among the highest of Fitch-rated sovereigns, with its sovereign net foreign assets contributing to around 180 per cent of the country’s gross domestic product in 2026.

These strengths are balanced by weak governance indicators relative to rating peers, high geopolitical risk, the UAE's high dependence on hydrocarbon income and the significant leverage of government-related entities (GREs).

The UAE’s GDP is expected to rise by 0.5 per cent in 2026, with a 1.5 per cent contraction in non-oil GDP, as per Fitch’s projections. Earlier in October, the International Monetary Fund forecasted that the country’s economy will grow by 7.7 per cent in 2027, following a shrinkage of 3.9 per cent this year.

Moody's, another credit ratings agency, said the UAE economy is forecast to grow 8.2 per cent in 2027, the fastest pace among the largest emerging markets Moody’s Ratings tracks in the Middle East and Africa.

Dubai's GDP, on the other hand, will shrink by close to 5 per cent, which Fitch expects real GDP to remain below its 2025 level in 2027 as logistics and manufacturing are disrupted and tourism and expat inflows return only slowly.

Fitch expects surpluses in Abu Dhabi and Dubai and budget deficits in Ras Al Khaimah (A+/Negative) and Sharjah (not rated).

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