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.
This follows a projected 0.6 per cent contraction in 2026, according to the agency’s 2027 Outlook for Emerging Markets.
Moody’s expects growth to ease to 4.4 per cent in 2028. It projects UAE inflation at 4.8 per cent this year and 5.8 per cent in 2027, before cooling to 3.3 per cent in 2028. The UAE grew 6.2 per cent in 2025, and its sovereign rating is Aa2 with a stable outlook.
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The report says the largest emerging economies could see some upside to growth if the Middle East conflict eases.
Moody’s forecast sits within a wide range of projections for the UAE’s recovery. The International Monetary Fund (IMF) projects 7.7 per cent growth in 2027, after a 3.9 per cent contraction this year. Last month, the World Bank forecast 9.5 per cent growth for 2027 after a 1.6 per cent contraction in 2026. The Central Bank of the UAE raised its 2027 growth forecast to 10.4 per cent from 9.8 per cent, citing higher oil production and resilient non-oil activity.
S&P Global Ratings has also predicted a V-shaped recovery for Dubai in 2027 after the emirate’s economy shrank in 2026. Minister of Economy and Tourism Abdulla Bin Touq Al Marri has said 2027 will be a “counter-attack year” for the UAE economy.
The Middle East war between the US, Israel and Iran, which broke out on February 28, 2026, has been taking a toll on regional economic growth this year. But the region will bounce back next year as all the GCC countries will record strong growth.
Regional economies, banks
Saudi Arabia, rated Aa3 with a stable outlook, is forecast to contract 2.8 per cent in 2026 before growing 5.1 per cent in 2027. Moody’s expects growth to accelerate to 6 per cent in 2028. Inflation is projected at 2.1 per cent this year, 1.9 per cent in 2027 and 2.2 per cent in 2028.
The IMF is more optimistic about the kingdom. It expects Saudi Arabia, which grew 4.6 per cent in 2025, to expand 7.9 per cent in 2027.
Moody’s warned that Gulf banks face a tougher year. “In the Gulf, asset quality is likely to deteriorate in 2027” as the operating environment weakens amid the ongoing conflict and associated disruptions, the report says.
This contrasts with the wider emerging-market picture, where bank balance sheets are expected to keep improving.
Moody’s expects average growth across the largest emerging economies to be steady but slow, at 4.0 per cent in 2027 against 3.7 per cent in 2026. Its stable outlook is supported by sovereign efforts to contain debt, strong demand for metals used in data centres and electrification, and the reorganisation of global supply chains.
The agency expects oil to average around $90 a barrel in 2027. It says prolonged trade disruption through the Strait of Hormuz, a stronger US dollar or higher US interest rates could constrain liquidity and raise borrowing costs across emerging markets. It adds that energy-dependent economies such as Türkiye, Egypt and Pakistan will face higher prices and tighter supply.
Source: Khaleej Times