A. SREENIVASA REDDY (ABU DHABI)
GCC sovereigns, including Abu Dhabi and the UAE, have largely retained their pre-war credit ratings despite the outbreak of regional hostilities and disruption to shipping through the Strait of Hormuz, according to an analysis by Fitch Ratings.
Abu Dhabi retained its AA rating with a Stable Outlook, while the UAE maintained its AA- rating with a Stable Outlook. Fitch said both were better positioned to withstand the economic consequences of the war because of their substantial financial buffers and sovereign net foreign assets.
Sovereign ratings across the Middle East and North Africa have so far proved resilient despite sporadic attacks, disruption to the main route for Gulf hydrocarbon exports and weaker activity in several sectors, Fitch said.
Higher oil prices, recovering exports through pipelines and shuttle operations, and substantial financial buffers have helped support the credit profiles of GCC sovereigns, the rating agency added.
Fitch’s base case assumes that some form of durable agreement to reopen the Strait of Hormuz will be reached around the first quarter of 2027. In the meantime, the UAE is increasing spending to support economic activity, in contrast to some regional governments that are reducing expenditure in response to lower revenue.
Fitch said sovereigns rated in the AA category continued to hold substantial buffers whose value was also supported by investment income not directly linked to oil prices.
Abu Dhabi’s rating reflected its high GDP per capita and strong fiscal and external positions. Government debt remained among the lowest of sovereigns rated by Fitch, while sovereign net foreign assets were among the highest.
The agency said Abu Dhabi’s oil exports had proved resilient despite transport bottlenecks through the Strait. Oil output recovered strongly following a decline in March and subsequently rose above 2025 levels, while production facilities were not affected by direct missile strikes.
Fitch expects Abu Dhabi to record budget surpluses exceeding 8% of GDP until 2028, supported by oil revenue. Oil production is projected to increase to 4.3 million barrels per day in 2028, about 1.2 million barrels per day above the 2025 level.
The agency expects Abu Dhabi’s financing position to remain strong between 2026 and 2028, with government debt at about 22% of GDP.
If the economic consequences of the war deepen or oil prices decline sharply, Fitch expects Abu Dhabi to favour additional borrowing rather than drawing down sovereign assets.
For the wider UAE, Fitch said the rating was supported by low consolidated public debt, a strong net external asset position and high GDP per capita. The federal rating also benefited from Abu Dhabi’s substantial sovereign foreign assets.
The UAE’s consolidated budget is expected to remain in surplus until 2028 under Fitch’s oil-price assumptions. The agency expects Abu Dhabi and Dubai to increase spending significantly on alternative logistics routes and measures intended to support economic activity.
Government debt is forecast to remain close to 24% of GDP between 2026 and 2028, reflecting increased borrowing in Abu Dhabi and Sharjah, alongside continued federal borrowing to develop the UAE’s yield curve.
Fitch’s tables forecast UAE real GDP growth of 0.9% in 2026, accelerating to 8.8% in 2027, before moderating to 3.8% in 2028. These figures indicate marginal economic growth in 2026 rather than the contraction projected by most of the global agencies.
For Abu Dhabi, Fitch forecasts total real GDP growth of 7.6% in 2026—led by strong hydrocarbon output—followed by 10.9% in 2027 and 3.9% in 2028
Elsewhere in the GCC, Fitch retained Qatar’s AA rating and Ras Al Khaimah’s A+ rating, but assigned Negative Outlooks to both. Qatar’s outlook reflected the disruption to LNG exports through the Strait, while Ras Al Khaimah’s outlook reflected risks to a major tourism project whose opening was delayed by shipping and supply-chain disruptions.