Ratings agency S&P Global affirmed the UAE's strong credit rating on Monday, stressing that its economy has “substantial” fiscal buffers to handle the impact of the Iran war, which has now been raging for more than a week.
The ratings agency said it maintains its “AA/A-1+” long- and short-term foreign and local currency sovereign credit ratings for the UAE with a stable outlook.
A sovereign credit rating measures a government’s ability to repay its debts. It gives insights into the level of risk associated with investing in the debt of a particular country.
“Our estimate of the exceptional strength of the government's consolidated net asset position (estimated at 184 per cent of GDP in 2026) provides a significant fiscal external and economic buffer to external shocks,” S&P said in a report.
The UAE’s general government debt is “very low”, estimated at about 27 per cent of GDP this year, and its consolidated fiscal balance has averaged a surplus of 5.6 per cent over 2021-2025.
“We also believe the authorities will deploy their substantial policy flexibility to counteract the effects of volatility stemming from geopolitical tensions in the Gulf region on economic growth, government revenue, and its external accounts,” the agency said.
“We believe this flexibility will enable the UAE to withstand … the temporary disruption of oil production and export routes.”
The US and Israel launched attacks against Iran on February 28, hitting targets across the country. In retaliation, Tehran has fired drones and missiles at Arab nations across the Middle East, intended to hit US interests and Washington's allies in the region.
The rapidly-expanding conflict has upended global financial and energy markets, with oil prices on Monday up more than 13 per cent at $105 per barrel as the Strait of Hormuz remains effectively closed.
S&P revised its Brent oil price annual forecast to $65 per barrel on March 5 from $60 per barrel earlier, mainly because of the conflict, “despite oversupplied fundamentals”.
“Our current expectations are that the regional war – and severe threats to the UAE’s key infrastructure – will recede after a few weeks, and a period of recovery will be enabled by the authorities’ strong balance sheet and willingness to resume stability,” S&P said.
The agency expects the government will continue to run a fiscal surplus averaging 2.6 per cent of GDP to 2029.
S&P also affirmed its “AA/A-1+” long- and short-term foreign and local currency sovereign credit ratings for the emirate of Abu Dhabi, with a stable outlook.
The government’s net asset position, estimated at 358 per cent, provides a “significant buffer to external shocks”, it said.
“The emirate has also shown a consistent capacity to navigate periods of stress, underpinned by a solid record of prudent policymaking,” it added.
