Standard & Poor's assigns the UAE an "AA" credit rating

The UAE receives a long-term credit rating of "AA"

Continued Credit Achievement: Standard & Poor's Grants the UAE a Long-Term 'AA' Credit Rating

Standard & Poor's Global Ratings has assigned the UAE a long-term sovereign rating of 'AA' and a short-term rating of 'A-1+' for foreign and local currency debt, with a stable outlook. The agency noted the UAE's "strong fiscal and external positions," according to a note published on its website.

The global credit rating agency stated that these ratings reflect the UAE's net asset position, which may provide protection against the effects of oil price volatility and geopolitical tensions in the Gulf region. According to the agency, this rating indicates the country's strong ability to meet its financial obligations.

The UAE's strong rating is in line with the broader trend observed in the Middle East. In March, Standard & Poor's Global Ratings upgraded Saudi Arabia's rating from 'A' to 'A+' with a stable outlook, supported by the Kingdom's ongoing social and economic transformation.

In its latest report, the US-based agency said, "The stable outlook reflects our expectation that the UAE's consolidated fiscal and external positions will remain strong over the next two years, amid continued prudent policies and resilient economic growth." This is the first time Standard & Poor's has issued a consolidated sovereign credit rating for the UAE as a whole, rather than for the emirates individually.

Rating Motivations

The UAE government has strong net assets that protect it from the effects of oil price fluctuations amid escalating geopolitical tensions in the region. This will help it maintain its projected economic growth, government revenues, and positive external balance.

At the same time, the government has been able to generate revenues outside the oil and gas sector thanks to policy measures such as spending control and economic diversification efforts, the agency said.

Non-oil Sector Drives Growth

Standard & Poor's expects the UAE's GDP growth to hover around 4% during 2025-2028, which it attributes to "booming non-oil sector activity and increased oil production." It also expects crude oil production to reach around 3.5 million barrels per day in 2028, up from 3 million barrels in 2024. This, coupled with increased liquefied natural gas (LNG) production capacity, will boost growth over the next few years.

The report stated, "Despite lower oil prices and the challenges posed by the global economic slowdown, we expect continued fiscal surpluses at the federal and individual emirate levels, coupled with investment income from liquid assets, to support net asset growth to an estimated 177% of GDP through 2028."

Meanwhile, "public investment, government efforts to diversify the economy, and increased trade and foreign investment" will support growth in the non-oil sector, according to the agency's forecasts.

The UAE is also expected to record fiscal surpluses averaging 3.2% of GDP through 2028, but the surplus will halve compared to 2021-2024, according to Standard & Poor's. Lower oil prices and higher government spending are expected to reduce the surplus to 2% of GDP this year and 3.8% on average during 2026-2028, lower than the 6.4% average recorded in 2021-2024.

Government debt will remain stable at around 28% of GDP over the next four years, as the federal government and the emirates, including Abu Dhabi, plan to issue local currency bonds to develop local capital markets.

Projected GDP Growth

Earlier this month, the Central Bank of the UAE revealed that the UAE's GDP will reach AED 1.77 trillion ($481.4 billion) in 2024, recording a growth of 4%, with non-oil sectors contributing 75.5% of the total. The Central Bank added that the UAE is expected to experience economic growth of 4.5% in 2025, before accelerating to 5.5% in 2026.

The latest analysis by Standard & Poor's Global indicates that the UAE's oil production is expected to rise to around 3.5 million barrels per day by 2028, up from just under 3 million barrels in 2024, while the Ghasha and Ruwais LNG projects are expected to significantly boost Abu Dhabi's production capacity. Non-oil growth in the UAE will support public investment and government efforts to diversify the economy, along with increased trade and foreign investment.

The analysis added that "projects such as the Saadiyat Cultural District, Disneyland Abu Dhabi, and the Wynn Resort in Ras Al Khaimah aim to boost tourism revenues." Confirming the country's tourism growth, a report released in April showed that Dubai recorded a 3% annual increase in international visitors, reaching 5.31 million in the first quarter of this year.

According to data released by Dubai's Department of Tourism and Commerce Marketing, the city also attracted 18.7 million international tourists in 2024, a 9% increase compared to the previous year.