Today's Edition
A. SREENIVASA REDDY (ABU DHABI)
S&P Global Ratings affirmed its “AA/A-1+” long- and short-term foreign and local currency sovereign credit ratings on Abu Dhabi and the UAE, while maintaining a stable outlook on both.
The assessment reflects S&P’s view that the large fiscal and external buffers of Abu Dhabi and the UAE provide significant room for policy manoeuvring amid adverse geopolitical developments. A stable outlook indicates that S&P does not currently expect a rating change over its normal rating horizon.
S&P said strong financial buffers in the form of sizable fiscal and external assets, sovereign wealth fund holdings and foreign exchange reserves provide Abu Dhabi and the UAE a significant cushion amid a volatile geopolitical environment.
“AA” is a high investment-grade long-term sovereign rating and indicates a very strong capacity to meet financial commitments. It is two notches below S&P’s highest “AAA” rating, with “AA+” between the two. “A-1+”, meanwhile, is S&P’s highest short-term rating and indicates an extremely strong capacity to meet short-term financial commitments.
S&P estimates Abu Dhabi’s nominal GDP at about Dh1.24 trillion in 2026, with real GDP growth of 4.3%, following 7.1% growth in 2025. It expects Abu Dhabi’s real growth to average about 6.2% over 2027-2029. It projects 8.6% growth for 2027, 4.5% for 2028 and 5.4% for 2029.
For the UAE as a whole, nominal GDP is projected at about Dh2.56 trillion in 2026, with real GDP growth of 2.4%, following 6.2% in 2025. UAE growth is also projected to average about 6.2% over 2027-2029. Real GDP growth is projected at 8% for 2027, 5.2% for 2028 and 5.4% for 2029.
The three major international rating agencies — S&P Global Ratings, Fitch Ratings and Moody’s Ratings — assess Abu Dhabi and the UAE separately, reflecting their distinct fiscal positions and borrowing profiles
Abu Dhabi
S&P said Abu Dhabi’s rating continues to be supported by its strong fiscal and external position, with the government’s net asset position estimated at 326% of GDP in 2026, providing what the agency described as a significant buffer against external shocks.
S&P expects the UAE’s exit from OPEC and OPEC+ to provide Abu Dhabi with greater flexibility to increase oil production. Before the exit, the UAE’s production quota stood at about 3.4 million barrels per day (mbpd), including voluntary contributions, below its estimated production capacity of 4.85 mbpd. Production had increased to about 3.8 mbpd by July, while ADNOC is targeting a production capacity of 5 mbpd by 2027.
S&P’s base case assumes oil production will rise from an average of 3.4 mbpd in 2026 to 4.3 mbpd in 2027 and 5 mbpd by 2029. The agency expects the expansion in hydrocarbon production to support Abu Dhabi’s economic recovery from 2027.
The ratings agency also highlighted investments aimed at strengthening Abu Dhabi’s ability to export hydrocarbons through routes that bypass the Strait of Hormuz.
The existing Habshan-Fujairah pipeline, also known as the Abu Dhabi Crude Oil Pipeline, or ADCOP, gives UAE crude direct access to Fujairah and onwards to the Indian Ocean and global markets. The pipeline has a nameplate capacity of about 1.5 mbpd, while throughput has reportedly approached 1.8 mbpd in recent months.
The UAE is also developing a new LNG export corridor and a West-East oil pipeline, which S&P expects to become operational by 2027 and double ADNOC’s export capacity through Fujairah.
S&P said government capital expenditure should provide support to other areas of the Abu Dhabi economy. It cited a pipeline of 24 public-private partnership projects worth a combined Dh55 billion, planned for tendering during 2026-2027 across transport, core infrastructure and social infrastructure.
S&P said Abu Dhabi has accumulated one of the largest government net asset positions among the sovereigns it rates. Even after adding the debt of Abu Dhabi government-related entities and the direct debt of some other emirates to Abu Dhabi’s balance sheet, S&P estimated that the government would retain a net asset position exceeding 100% of GDP.
UAE
For the UAE as a whole, S&P said its ratings remain supported by strong fiscal and external positions. The consolidated government net asset position is estimated at 147% of GDP in 2026, while general government debt is relatively low at about 26% of GDP.
The agency said the UAE’s fiscal buffers, moderate debt and strong foreign exchange reserves should help mitigate external risks. It calculated government liquid assets at about 170% of GDP, including assets managed by sovereign wealth funds such as the Abu Dhabi Investment Authority and Emirates Investment Authority, government deposits and minority listed holdings of individual emirates.
S&P also highlighted the resilience of the UAE banking sector. Banks had a net external asset position of about $247 billion as of June 30, equivalent to roughly 42% of systemwide domestic loans and the highest among GCC banking systems.
The agency said the position, alongside a diversified deposit base and high-quality liquid assets, provides significant capacity to absorb potential capital outflows.
