S&P pegs Abu Dhabi economy growth at 2.5% this year: S&P Global Rating sees Abu Dhabi’s real GDP growth coming in at 2.5% in 2025, and 3.5% over the next three years, buoyed by non-hydrocarbon activity edging up 3% a year, S&P Global said in a report seen by EnterpriseAM. Projected growth would be well below the 3.8% figure recorded in 2024, which was driven by a 6.2% expansion of the nonhydrocarbon sector.

Driving the growth: “We expect Abu Dhabi’s oil production will increase gradually since OPEC+ quotas are partially lifted and state-owned oil producer, refiner, and distributor ADNOC increases its capacity to 5 mn bpd by 2027 from 4.85 mn bpd currently. Over the next few years, we expect the Ghasha gas and Ruwais LNG projects to significantly enhance Abu Dhabi’s gas production capacity,” the agency said.

Background: The agency’s sovereign credit rating for Abu Dhabi is currently at AA/Stable/A-1+, with a stable outlook, with the agency citing strong fiscal buffers, growing non-oil sector contributions, increasing oil production and expanding domestic capital markets. “The stable outlook reflects our expectation that Abu Dhabi's fiscal and external positions will remain strong over the next two years, amid continued prudent policymaking and our hydrocarbon sector price assumptions,” the report said. A downward revision could occur if the emirate’s fiscal assets deteriorate sharply, while improved monetary policy and fiscal transparency could spur an upgrade.

Structural reforms conducted by the UAE and Abu Dhabi will also improve business environment and lure foreign investment, which the agency says will “boost labor market flexibility and increase investment and foreign worker inflows.” These measures include personal and family law liberalization, an FDI law that grants 100% ownership of businesses in various sectors by foreign investors, in addition to golden visas, which help support talent retention.

How this compares to others: The International Monetary Fund (IMF) expects Abu Dhabi’s economy to grow at a faster pace than Dubai’s this year, projecting 4.2% growth for the former and 3.3% for the latter. Abu Dhabi’s economy is expected to grow a further 5.8% next year, while Dubai’s could grow 3.5%. The IMF expects the UAE’s economy to grow 4% for 2025 and 5% for 2026 — making it among the fastest growing in the GCC this year. Non-oil GDP was projected to grow by 4.5%, driven by tourism, construction, public spending, and financial services.

On the fiscal front: Abu Dhabi’s fiscal surplus is projected to narrow from 6.7% of GDP in 2024 to 2.8% of GDP in 2025 before widening to about 6.0% on average over 2026-2028, according to S&P’s forecast.

RAS AL KHAIMAH’S GDP SEEN GROWING 3.3%-

ALSO- S&P Global sees Ras Al Khaimah’s economic growth easing to 3.3% in 2025 and 2026, on the back of increased external headwinds, before accelerating to 4.3% in 2027 and 2028, driven by real estate, manufacturing, mining, and tourism, Arab News reports, citing an S&P Global report. The emirate also benefits from wider federal financial backing from Abu Dhabi.

Background: The ratings agency recently upgraded Ras Al Khaimah to an A sovereign credit rating with a stable outlook, citing strong tourism-driven growth, infrastructure investment, prudent fiscal management, and solid returns from state-owned entities

Steady on the surplus side: The emirate’s fiscal surpluses are expected to remain modest, averaging 2% of GDP through to 2028. With a net asset position of 21% of GDP, S&P said RAK is well-positioned to maintain stability even as infrastructure spending rises thanks to stable revenues and low leverage. The emirate posted a fiscal surplus of AED 2.9 bn in 2024 — 6.5% of GDP — supported by land sales, municipal revenues, and restrained capital spending.

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