S&P Expects a V-Shaped Recovery for Dubai's Economy in 2027 After This Year's Contraction

Grant, speaking at a panel on the war and the outlook for Dubai's residential property market in 2027, said Dubai's real GDP contracted by just over 2% in the first half of 2026. Wholesale and retail trade, tourism-related sectors and manufacturing all declined, she said. The forecast gives investors and lenders an outside view of how fast the emirate can recover, at a time when S&P separately expects a correction in Dubai's housing market.

S&P's base case for the Gulf assumes the war keeps causing disruption through 2027 but that a recovery follows. Grant named four drivers for Dubai: a rebound in UAE oil production, continued construction, population growth and a government with room to borrow.

On oil, she said a second West-East pipeline through Fujairah, expected early in 2027, will add flexibility. Construction and finance kept growing in the first half of this year despite the downturn elsewhere, and big projects such as Al Maktoum International Airport, the drainage scheme and the Metro expansion are still being approved and going ahead. Grant said that should keep construction growing through the second half.

She said Dubai's population was about 4.8 million in October 2026, after record growth of 7.8% in 2025. Government debt has stabilised at about 15% of GDP after being reduced following the pandemic. That leaves room to borrow for large capital projects if needed, she said, while spending has been kept in check and non-tax revenue such as dividends and service fees is holding up.

The Central Bank of the UAE has also turned more optimistic. In its October Quarterly Economic Review it raised its 2027 growth forecast for the UAE to 10.4% from the 9.8% it projected in June, expecting both oil and non-oil activity to drive growth. The upgrade assumes the UAE reaches oil production of five million barrels per day next year. That output target, and the timing of the Fujairah pipeline, are the variables most likely to decide whether the recovery takes the shape S&P expects.