Today's Edition
A. SREENIVASA REDDY (ABU DHABI)
Abu Dhabi is expected to grow by 6.8% in 2026, according to a new forecast by Fitch Ratings, with higher oil production quotas and continued strength in non-oil activity driving what the agency describes as one of the strongest outlooks in the region.
Ras Al Khaimah (RAK) is projected to expand even faster, with Fitch estimating a 7.7% growth rate in 2026 on the back of major ongoing investment projects.
In its latest assessment of sovereign credit conditions across the Middle East and North Africa, Fitch Ratings said Abu Dhabi’s growth prospects remain underpinned by robust government and government-related entity (GRE) spending, ongoing reforms, and steady expansion in non-oil sectors across the UAE. The agency noted that these dynamics are expected to support “solid non-oil growth” across the federation.
Fitch also highlighted that inflation across the UAE and the wider GCC is set to remain contained, staying in the single-digit range. However, it cautioned that rising residential rents could become a source of price pressure in the period ahead—an issue noted particularly in fast-growing urban centres such as Abu Dhabi and Dubai.
Government-related entities will continue to play a pivotal role in financing investment in the UAE, Fitch said.
“Government-related entities will retain an important role in investment financing and we anticipate their debt to rise, particularly in Abu Dhabi and Saudi Arabia,” the agency stated. Despite this, Fitch noted that sovereigns are prioritising “balance-sheet optimisation,” with asset sales helping to support deleveraging across several GCC economies.
The ratings agency also said that strong economic activity driven by sovereign spending, GRE projects and private-sector expansion will keep GCC countries among the largest issuers of international debt in 2026.
As part of its regional analysis, Fitch reaffirmed Abu Dhabi’s Long-Term Foreign-Currency Issuer Default Rating (IDR) at AA with a Stable outlook, reflecting the emirate’s exceptionally strong fiscal buffers, low debt burden and substantial sovereign wealth assets. Abu Dhabi also holds an F1+ Short-Term Foreign-Currency IDR — the highest possible rating in that category — and an AA+ Country Ceiling, indicating very low transfer and convertibility risk.
The UAE’s federal sovereign rating stands at AA-, also with a Stable outlook. This strong rating reflects the UAE’s diversified economic base, supportive policy environment and the fiscal strength of Abu Dhabi, which anchors the wider federation. The UAE likewise holds a top-tier F1+ short-term rating and an AA+ Country Ceiling.
RAK maintains an A+ Long-Term Foreign-Currency IDR with a Stable outlook, signalling solid creditworthiness and one of the strongest profiles among smaller sovereign issuers in the region. RAK also benefits from the UAE’s AA+ Country Ceiling and carries an F1+ short-term rating.
Fitch’s sovereign ratings measure a government’s ability to meet its financial obligations. The scale ranges from AAA — the highest possible rating — down through AA+, AA, AA-, and into the A and BBB categories, which all represent investment-grade quality. Ratings of BB+ and below are considered speculative.
Outlooks of Stable, Positive or Negative indicate whether the rating is likely to change over the next one to two years. Short-term ratings such as F1+, F1, or F2 assess a sovereign’s capacity to meet near-term obligations, with F1+ representing the strongest ability.
