Today's Edition
A. SREENIVASA REDDY (ABU DHABI)
Fitch Ratings affirmed the UAE's long-term foreign-currency issuer default rating at AA- and its short-term rating at F1+, reflecting its assessment of the country's strong capacity to meet financial obligations. It also maintained the UAE's Country Ceiling at AA+, two notches above the sovereign rating, indicating relatively low risks associated with restrictions on foreign-currency conversion and overseas transfers.
The global credit rating agency maintained a Stable Outlook on the UAE, citing its low government debt, strong net external asset position, high GDP per capita and resilience of oil export revenues despite disruptions caused by the Iran war.
“The Stable Outlook reflects demonstrated resilience of oil export revenues during the Iran war, which largely offsets the immediate negative impact of the war, as well as abundant fiscal and external buffers, and our expectation that individual emirates will bear the cost of the war rather than the federal government,” Fitch said in its rating commentary.
Fitch said the UAE's credit strength benefits significantly from Abu Dhabi's sovereign net foreign assets, estimated at 180% of UAE GDP in 2026, among the highest levels for sovereigns rated by the agency.
The agency expects Abu Dhabi's oil export revenues in 2026 to exceed its pre-war forecasts despite disruptions to shipments, supported by higher oil prices and export volumes.
Fitch estimated an average oil price of $87 per barrel for 2026, while noting that the combination of pipeline exports through Fujairah and shipments moving through the Strait of Hormuz under US protection had helped sustain oil exports.
It also considered Abu Dhabi's oil export infrastructure less vulnerable to long-term physical damage than more concentrated downstream oil and liquefied natural gas facilities.
On economic growth, Fitch forecast the UAE's real GDP to expand by 0.5% in 2026, supported by a projected 7% increase in hydrocarbon GDP, while non-oil GDP is expected to contract by 1.5%.
The agency projected Dubai's GDP to contract by nearly 5% in 2026 and remain below its 2025 level in 2027, reflecting disruptions to logistics and manufacturing and a gradual recovery in tourism and expatriate inflows. However, it expects individual emirates to introduce economic recovery programmes.
Fitch projected hydrocarbon GDP growth to accelerate to approximately 26% in 2027, with oil production no longer constrained by OPEC+ quotas. It expects non-oil trend growth to remain below pre-war levels during its forecast period.
The agency expects the UAE's consolidated government budget to remain in surplus in 2026 at 4% of GDP, despite a projected increase of nearly 20% in government spending to mitigate the immediate effects of the war and support economic recovery.
It expects Abu Dhabi and Dubai to maintain budget surpluses, while Ras Al Khaimah and Sharjah are projected to record deficits.
Consolidated UAE government debt is forecast to rise marginally to 22.8% of GDP in 2026, from 22.6% at the end of 2025, remaining substantially below the 45% median for sovereigns in the AA rating category.
Fitch also highlighted the UAE's substantial external financial reserves. Central Bank foreign-exchange reserves stood at $265 billion in August 2026, compared with more than $300 billion in February.
The agency said the high starting level of foreign-exchange reserves, together with the substantial assets held by the Abu Dhabi Investment Authority (ADIA), provided ample financial buffers to maintain macroeconomic stability.
Fitch projected the UAE's current account surplus at 6.7% of GDP in 2026, compared with 13.3% in 2025.
The agency also assessed the UAE banking sector as resilient under its base-case assumptions, citing sound financial indicators, ample liquidity and strong capital buffers.
It said the UAE's domestic political stability and strong business and regulatory environment continued to support its sovereign credit profile.
Fitch maintained the UAE's long-term local-currency issuer default rating at AA- with a Stable Outlook, its short-term local-currency rating at F1+, and its long-term senior unsecured debt rating at AA-.
