Moody's Sees Saudi Rebound to 5.1% Growth in 2027 and AI Capex Near $1 Trillion

The report, titled "Stable global growth will mask considerable variation in trends across economies", forecasts a gradual recovery in Gulf oil output and exports through 2027. Moody's said additional pipeline capacity, alternative shipping routes and bilateral arrangements are improving the region's ability to export, though Gulf economies remain more exposed than most to disruption in the Strait of Hormuz and wider regional insecurity.

For Gulf governments, the forecast puts a number on how long the war's hit to oil-dependent growth may last, and on how much of the cushion comes from state spending. Moody's said GCC governments had so far softened the impact of conflict-related disruptions through fiscal support and diversification programmes, with non-oil activity continuing to expand.

The agency did not publish a standalone forecast for the UAE. It said Gulf economies in general have been supported by strong public spending and growth outside oil, and that the region's long-term development plans continue to attract foreign investment and support tourism, while noting that stability remains important to investor confidence. Khaleej Times, which reported the outlook, said the UAE is likely to stay among the region's more resilient economies.

At the global level, Moody's expects growth to ease to 2.6 per cent before stabilising through 2027 and 2028. Advanced economies are forecast to grow around 1.7 per cent through 2028, while emerging-market growth slows before recovering to about 4 per cent. The US is expected to return to trend growth of about 2 per cent as consumer spending and AI investment moderate, eurozone growth to reach 1.4 per cent by 2028, and China's structural slowdown to continue.

Investment in AI and digital infrastructure, defence, supply-chain resilience and energy security will keep supporting activity, Moody's said, though higher borrowing costs and geopolitical risk could limit it. The agency estimates hyperscaler capital spending on AI will remain near $1 trillion next year, and cautioned that the returns on that spending will come under increasing scrutiny.