Abu Dhabi's and Qatar's credit ratings remain at a high-grade level with their outlooks stable, underpinned by strong fiscal buffers enabling them to cope with the current geopolitical crisis, new reports from ratings agencies have shown.
The UAE capital's long-term foreign-currency issuer default rating was affirmed at AA, on the back of "very strong fiscal and external metrics", Fitch Ratings said on Friday.
An AA rating is the third-highest on Fitch's rating scale, just two notches below the top prime grade. Investment grade makes it easier to access capital markets and raise funding when the need to borrow arises.
The agency noted the resilience of Abu Dhabi's oil export revenue amid the Iran crisis, "which significantly offsets the negative impact of the war".
Exports through the Port of Fujairah have also helped negate the effects of the closure of the Strait of Hormuz, which energy exports from the UAE and other Middle East nations are normally ferried through.
With the bulk of the emirate's exports being crude oil, "we consider Abu Dhabi's oil export infrastructure less vulnerable to long-term damage than more concentrated and bespoke downstream oil or liquefied natural gas plants", analysts at Fitch wrote.
Still, risks remain amid the "highly uncertain" US-Iran conflict: any escalation of hostilities that would further disrupt exports and hit energy infrastructure, and the prolonged closure of the strait could weigh on Abu Dhabi's credit profile, they said.
Fitch also expects Abu Dhabi's economy to contract by about 1 per cent in 2026, with both oil and non-oil activity contracting, though the latter is projected to return to growth rapidly, albeit at a slower pace compared to the prewar period, Fitch said. Abu Dhabi's banking sector also remains robust.
"A more lasting and structural deterioration in the regional security environment would challenge economic diversification, non-oil growth and, potentially, the sovereign balance sheet," Fitch said.
Qatar, meanwhile, retained its AA long and short-term foreign and local currency sovereign credit ratings, S&P Global Ratings said, citing "sizeable" accumulated fiscal and external assets that will help the state navigate through the geopolitical crisis. The rating is also the third highest on S&P's scale.
The Gulf nation's energy assets were among the hardest hit by Iranian attacks at the height of the war, resulting in industry major QatarEnergy – which supplies about a fifth of the world's LNG supply – to declare force majeure.
But Doha's "large stock of accumulated liquid assets should help it weather the impact of the regional conflict and the supply disruptions it has caused in the Strait of Hormuz", analysts at S&P wrote. About 90 per cent of Qatar's exports pass through the key chokepoint.
Qatar's economy, however, is expected to shrink by about 5 per cent in 2026, underlined by the shutdown of its LNG production, and the spillover effect of the war on non-hydrocarbon sectors such as trade, manufacturing and hospitality, they said.
"We nevertheless forecast that Qatar's economic growth will rebound after this year, supported by continuing LNG production expansion," the analysts said, expecting GDP growth to average 4.8 per cent in the 2027-to-2029 period, "as additional gas production starts in 2027 as per our base-case scenario."
Gulf and Middle East states are constantly assessing the situation between the US and Iran, whose conflict that is entering its 10th week has roiled the region's export markets and economies.
The World Bank, in a report early last month, expected economic growth in the Middle East to slow to 1.8 per cent this year as a result of the Iran war, warning the fallout can result in long-term “scarring”.
Growth for the UAE, the second largest economy in the Arab world, was revised down to 2.4 per cent from a previous 5.1 per cent estimate, while Qatar's is pegged to contract anywhere from 5.7 per cent and 6.4 per cent.
