Dubai's debt burden set to decline in 2023 on robust economic growth
S&P Global Ratings expects Dubai's government debt burden as a share of GDP will decline to about 51% of GDP in 2023 from a cyclical high of 78% in 2020 amid robust economic growth.
In a report issued on Monday titled, “Dubai's Debt Reduction Strengthens Government Balance Sheet”, the ratings 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.
This year, S&P expects Dubai's real GDP to expand about 3%, slowing from an estimated 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."
Moreover, local and UAE-wide structural and social reforms and programs should support longer-term growth.
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