Dubai’s financial position has strengthened markedly in recent years, supported by reduced exposure to the real estate sector, a lower-than-expected debt burden, and steady economic reforms, according to a new assessment by Bank of America (BofA). The bank said the emirate’s credit profile has improved significantly, signalling far greater stability than during the global financial crisis of 2008–09.
During that period, Dubai’s property market suffered a severe crash, forcing the emirate to restructure large portions of its debt and triggering a deep economic downturn. Business closures, job losses and a sharp contraction followed as the fallout from the collapse of Lehman Brothers rippled worldwide. BofA noted that Dubai’s past challenges stand in contrast to its current financial position, which includes record spending plans and a sustained budget surplus.
Dubai’s government recently approved a historic Dh302.7 billion three-year budget for 2026–2028, projecting a 5% operating surplus. BofA said the emirate has benefited from strong population inflows, improved regulations, and tighter oversight of the property market. “We estimate Dubai’s credit profile to have considerably strengthened,” the bank wrote, highlighting that leverage in the real estate sector remains far lower than before the 2008 crash and that banks now maintain stronger capital positions.
Figures from Dubai’s Department of Finance show total outstanding government debt stood at Dh112.4 billion as of September 30, 2025 — a 3.9% decrease from the previous year. The debt-to-GDP ratio has fallen to 20.8%, supported by diversified financing instruments and a more resilient debt structure.
Data from the Central Bank of the UAE also point to improving financial health across the wider banking system. The national loan portfolio grew 11.1% year-on-year, supported by favourable economic conditions, while banks reported a capital adequacy ratio of 17.3% in the second quarter of 2025. Asset quality improved as the net non-performing loan ratio dropped to 1.7%.
BofA attributed Dubai’s stronger credit outlook to stable growth, tax reforms and tighter spending control. The bank expects the central government’s fiscal balance to reach 4% of GDP in 2025 — double the initially budgeted figure — citing first-half results. Dubai has recorded budget surpluses each year since 2021, rising from 1.5% of GDP in 2021 to 8.5% in 2024.
The International Monetary Fund has projected Dubai’s economy will expand 3.4% in 2025, driven mainly by non-oil sectors such as tourism, trade, finance, hospitality, real estate, aviation and logistics.
The Central Bank’s latest business survey also signalled strong momentum. Dubai’s PMI rose to 53.5 in July from 51.8 in June, reflecting rising demand and increased activity across key industries.
BofA said Dubai’s improving financial metrics mean its implied sovereign rating is now closer to Abu Dhabi’s than at any time in the past two decades, strengthening the case for the emirate to pursue a formal sovereign rating in future.
