Dubai is likely to see a V-shaped recovery in 2027 after its economy contracts this year due to the regional conflict, according to S&P Global Ratings.

Olivia Grant, associate director for financial institutions ratings at S&P Global Ratings, said the rebound would be supported by a recovery in UAE oil production, continued construction activity, population growth and a government with room to borrow. She was speaking at a panel on the Middle East war and the outlook for Dubai's residential real estate in 2027.

S&P's base case for the Gulf assumes the war will continue to cause disruption through 2027, but that a recovery will follow. Part of the rebound is expected to come from UAE oil output, with a second West-East pipeline via Fujairah, due early in 2027, adding flexibility.

Construction and finance continued to expand in the first half of 2026 despite the downturn elsewhere. Major projects including Al Maktoum International Airport, the drainage scheme and the Metro expansion are moving ahead, which Grant said should sustain construction growth.

According to Grant, Dubai's real GDP contracted by just over 2 per cent in the first half of 2026, with wholesale and retail trade, tourism-related sectors and manufacturing all declining.

The Central Bank of the UAE raised its 2027 growth forecast for the country to 10.4 per cent in its October Quarterly Economic Review, up from 9.8 per cent in June, expecting oil production to reach five million barrels per day next year.

Grant noted that Dubai's population stood at about 4.8 million as of October 2026, after record growth of 7.8 per cent in 2025, and that government debt has stabilised at about 15 per cent of GDP, leaving room to borrow for large capital projects if needed.

(Source: Khaleej Times)