Fitch Ratings is expecting the UAE's economy to rise in 2026 as it maintained the country's high-grade credit rating, citing resilient fiscal buffers.
Real gross domestic product in the Arab world's second largest economy would grow by 0.5 per cent this year, despite an estimated 1.5 per cent contraction in non-oil GDP, the New York-based agency said on Friday.
Analysts at Fitch said Dubai's real GDP would remain below its 2025 level next year, as it continues to recover from the effect of the Iran war. The emirate's economy hit Dh473 billion ($128.8 billion) in the first half of 2026, down 2.3 per cent from a year earlier, as growth in financial services, healthcare and construction helped offset weakness in other sectors, government data showed last month.
Hydrocarbon GDP is expected to rise by about 7 per cent in 2026, then spike by 26 per cent next year, with oil production no longer constrained by Opec+ quotas, Fitch said. The Emirates formally withdrew from the oil group in May.
"Fitch expects all the emirates will put recovery programmes in place, but non-oil trend growth will be below pre-war levels over our forecast period," the Fitch analysts wrote.
Fitch also kept the UAE's sovereign credit rating at AA-, with a stable outlook, reflecting low consolidated government debt, strong net external asset position and high GDP per capita.
An AA- rating is the fourth-highest on Fitch's rating scale, just three notches below the top prime grade. Investment grade makes it easier to access capital markets and raise funding when the need to borrow arises.
Fitch said the Emirates also benefits from Abu Dhabi's sovereign net foreign assets which, at 180 per cent of UAE GDP in 2026, are among the highest of Fitch-rated sovereigns, it said. Fitch had rated Abu Dhabi AA in May.
"The stable outlook reflects demonstrated resilience of oil export revenues during the Iran war, which largely offsets the immediate negative impact of the war, as well as abundant fiscal and external buffers, and our expectation that individual emirates will bear the cost of the war rather than the federal government," Fitch said.
The UAE economy has fared relatively well despite geopolitical headwinds. GDP grew 0.4 per cent annually to Dh961.9 billion in the first half of 2026, driven by non-oil business activity, despite the impact of the Iran war.
The non-oil sector's contribution to the GDP during the first six-month period increased by 1.8 per cent to 79.2 per cent, the Federal Competitiveness and Statistics Centre revealed last month.
Last week, Sheikh Mohammed bin Rashid, Vice President and Ruler of Dubai, said the UAE’s foreign trade jumped close to a record Dh3 trillion in the first nine months of the year, despite the challenges.
Fitch added that Abu Dhabi's export revenues in 2026 is expected to be higher compared to its prewar forecasts despite the disruption, reflecting elevated crude prices and higher export volumes with the combination of exports via pipeline to Fujairah and the Strait of Hormuz.
"Crude oil constitutes the bulk of exports, and we consider Abu Dhabi's oil export infrastructure less vulnerable to long-term damage than more concentrated and bespoke downstream oil or liquefied natural gas plants," Fitch said.
