Capital Intelligence affirms UAE’s credit ratings with a stable outlook: Capital Intelligence Ratings affirmed the UAE’s long-term sovereign credit ratings for foreign and local currency at AA- with a stable outlook, it said in a statement. The credit rating agency also maintained short-term ratings at A1+, reflecting strong fiscal and external positions, Al Khaleej cites the report as saying.

Strong fundamentals and stability back the decision: The ratings are supported by the UAE’s stable political environment, high GDP per capita, and solid banking system. While oil and gas revenues accounted for 40% of government income and 26% of GDP in 2023, ongoing reforms and economic diversification are reducing reliance on hydrocarbons. Reservations in the ratings are primarily caused by budget rigidity and elevated geopolitical risks in the region and beyond.

Economic prospects remain strong: Real GDP growth is projected to rebound to 4% in 2024, driven by non-hydrocarbon sector expansion and a gradual hydrocarbon recovery. Growth is forecasted to average 5% in 2025-2026 as Opec+ production cuts ease. Current account surpluses, estimated at 8.8% of GDP in 2024, remain supported by resilient hydrocarbon exports and robust non-oil trade.

Fiscal resilience underpins stability: The consolidated fiscal surplus is expected to reach 4.8% of GDP in 2024, down slightly from 5% in 2023, while government debt is projected to decline to 31.4% of GDP. Sovereign wealth fund assets, notably the Abu Dhabi Investment Authority’s estimated USD 1.1 tn portfolio, and official reserves of USD 225 bn by the end of 2024, also boost the UAE’s credit strength.

The prospects: Capital Intelligence expects credit ratings to remain stable over the next year, provided reform momentum continues.

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