S&P Global maintains UAE credit ratings
MAYS IBRAHIM (ABU DHABI)S&P Global Ratings has assigned the UAE a sovereign credit rating of 'AA' for long-term, and 'A-1+' for short-term foreign and local currency obligations, with a stable outlook.The report cited the county's solid fiscal and external positions, prudent policymaking and resilient economic growth.Despite headwinds from lower oil prices and a global economic slowdown, S&P forecasts that the UAE's economy will remain resilient, growing at an average rate of about 4% annually between 2025 and 2028.This will be driven primarily by buoyant non-oil sector activity, public investment, and a measured increase in oil production as OPEC+ quotas ease. S&P also projects the UAE's consolidated fiscal surpluses will average 3.2% of GDP over the forecast period, assuming Brent oil prices of $60 per barrel (bbl) in 2025 and $65/bbl through 2028. The country's consolidated net asset position is expected to rise to an estimated 177% of GDP through 2028, supported by continued fiscal surpluses and investment income on liquid assets. "The exceptional strength of the government's consolidated net asset position provides a buffer to counteract the effects of oil price swings and geopolitical tensions in the Gulf region on economic growth, government revenue, and the external account," S&P stated.Government debt will remain stable at about 28% of GDP, as the federal government and individual emirates such as Abu Dhabi plan local currency debt issuances to develop domestic capital markets.Non-oil growth will be underpinned by public investment, economic diversification efforts, and increasing trade and foreign investment. The report cited major projects set to boost tourism revenue streams, such as the Saadiyat cultural district and Disney Park in Abu Dhabi, and the Wynn integrated resort in Ras Al Khaimah.The UAE's Comprehensive Economic Partnership Agreements (CEPAs) with 27 trade partners should cushion the impact of higher global trade tariffs, to some extent, according to S&P.It added that the potential impact on the UAE from the proposed 50% US tariff on steel and aluminum will only be modest if no agreement is reached. The UAE exported around $1.4 billion (0.3% of GDP) worth of steel and aluminum products to the US in 2023 – only 4.3% of its total non-oil exports. S&P also highlighted structural measures introduced by the UAE to improve its business environment. These include a foreign direct investment law that permits foreign investors to fully own businesses in various sectors, liberalised personal and family law, and the Golden Visa Programme, which "supports talent retention by granting long-term residency to investors, entrepreneurs, and skilled professionals.""We anticipate that these measures will increase labour market flexibility, investment, and foreign worker inflows. This will be balanced by the nationalisation of the workforce, or 'Emiratisation' policies," it stated.
The sharp escalation of the Israel-Iran conflict presents potential risks to GCC sovereigns. However, S&P believes the UAE's substantial assets and record of domestic stability mitigate vulnerabilities to external shocks.
"The Abu Dhabi Crude Oil Pipeline has the capacity to deliver about 50% of the emirate's oil exports directly to the Fujairah terminal on the Indian Ocean, diversifying its shipping routes. Through CEPAs, the UAE is also securing alternative trade routes to the Red Sea," it explained.
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