RIYADH: Fitch Ratings affirmed the UAE’s Long-Term Issuer Default Ratings at ‘AA-’ with a stable outlook, citing the country’s low consolidated government debt, strong external asset position and high per-capita income despite heightened regional geopolitical risks.
In its latest report, the ratings agency said the UAE continues to benefit from Abu Dhabi’s sovereign net foreign assets, estimated at 164 percent of gross domestic product in 2025, among the highest levels for Fitch-rated sovereigns.
The latest rating underscores the UAE’s position as a safe business haven in the region, even as some infrastructure in the Emirates was hit during the Iran war, resulting in limited casualties and some short-term business disruption.
An AA- rating indicates excellent financial strength and stability for an entity, though slightly below the ultra-safe AAA level.
“The stable outlook reflects the expected 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,” said Fitch.
The report, however, added that these strengths are balanced by weak governance indicators relative to rating peers, high geopolitical risk, the UAE’s high dependence on hydrocarbon income, and the significant leverage of government-related entities.
Fitch expects a gradual re-opening of the Strait of Hormuz from July, though the course of the war remains highly uncertain.
The agency projects the UAE’s real GDP to shrink by 4.8 percent in 2026, including a 3.2 percent contraction in non-oil GDP and close to a 7 percent decline in Dubai’s GDP.
Amid these challenges, Abu Dhabi’s 2026 export revenues are forecast to be higher than pre-war expectations due to elevated oil prices averaging $87 per barrel and increased pipeline exports to Fujairah.
The UAE’s consolidated fiscal balance is expected to remain in surplus at 4.5 percent of GDP in 2026, even as authorities increase spending to mitigate the economic effects of the conflict and fund recovery measures.
According to Fitch, consolidated government debt is projected to rise moderately to 27 percent of GDP in 2026 from 24.3 percent at the end of 2025, remaining well below the median for ‘AA’ rated sovereigns.
The agency said factors that could support a future upgrade include further strengthening of the UAE’s consolidated balance sheet, greater fiscal flexibility at the federal level and progress in reducing dependence on hydrocarbons.
Fitch added that significant disruption to oil and gas exports, severe damage to energy infrastructure or a prolonged closure of the Strait of Hormuz could place downward pressure on the rating.
