S&P Global Ratings anticipates that Dubai’s government debt burden relative to its GDP will decrease to approximately 51% in 2023 from its peak of 78% in 2020, thanks to strong economic growth.
In a report issued on Monday titled, “Dubai’s Debt Reduction Strengthens Government Balance Sheet”, the rating agency said the government’s debt stock could fall even faster if the reduction in nominal debt, which occurred in 2021 and to a more significant extent in 2022, continues over the coming years.
“Nevertheless, broader public sector debt will remain high at about 100% of GDP, when considering liabilities from nonfinancial government-related entities (GREs) of about 48% of GDP,” analysts Juili Pargaonkar and others wrote in the report.
S&P Global Ratings predicts that Dubai’s real GDP will experience a growth rate of around 3% in the current year. This reflects a slowdown compared to the estimated growth of 5.0% in 2022 and 6.2% in 2021.
“In our view, this year will be more reflective of regular economic activity in the emirate compared with the post-pandemic recovery years. We expect continued strong momentum in the hospitality, real estate, trade, and financial services sectors to support growth.”
Furthermore, the implementation of structural and social reforms and programs at both the local and UAE-wide levels is expected to bolster long-term growth.
