Fitch Keeps UAE at 'AA-' as Non-Oil Growth Turns Negative

Fitch Ratings affirmed the UAE's long-term foreign-currency issuer default rating at 'AA-' with a stable outlook. The long-term local-currency rating was held at the same level, also stable.

The agency listed a large external asset position, low government debt and high GDP per capita as supports. It named two constraints: elevated geopolitical risk and continued exposure to hydrocarbon revenue.

Fitch judged that the UAE sustained resilient oil export revenue through the conflict, backed by sizeable fiscal and external buffers. It expects the individual emirates, rather than the federal government, to absorb the costs the conflict creates.

The baseline assumes the Strait of Hormuz begins reopening gradually in the first quarter of 2027, with periodic strikes and counterstrikes continuing until then. Fitch expects the regional conflict to dampen activity, particularly in non-oil sectors.

Its forecasts show the split. Real GDP growth is put at 0.5% for 2026, while non-oil GDP contracts 1.5%. Dubai's economy is projected to shrink by nearly 5%, reflecting disrupted logistics and manufacturing along with slower tourism and weaker expatriate inflows.

Hydrocarbon GDP moves the other way: about 7% growth in 2026 and 26% in 2027, as output rises after OPEC+ production limits were lifted.

Fitch expects a consolidated budget surplus equal to 4% of GDP in 2026. Spending is forecast to rise almost 20% as the government offsets conflict effects and funds support programmes. Consolidated government debt is put at 22.8% of GDP in 2026, up from 22.6% at the end of 2025 and well below the 45% median for sovereigns rated in the 'AA' category.

Central Bank of the UAE foreign exchange reserves stood at $265 billion in August 2026, down from more than $300 billion in February 2026. Modest war-related capital outflows and deposit flows to India drove the decline. Fitch said the starting reserve position, together with Abu Dhabi Investment Authority assets, gives sufficient buffers for macroeconomic stability. The current account surplus is forecast to narrow to 6.7% of GDP in 2026 from 13.3% in 2025.

Those buffers carry the rating through a year in which the flow of revenue weakens. Higher spending, a smaller current account surplus and a thinner reserve cushion would strain most sovereigns. Here the stock of assets amassed over decades absorbs the shock, and borrowing costs across the federation rest on that arithmetic.

S&P Global Ratings affirmed the UAE's long- and short-term foreign- and local-currency ratings at 'AA/A-1+' in September 2026 with a stable outlook, and kept its transfer and convertibility assessment at 'AA+'. It cited strong fiscal and external positions, sovereign wealth fund assets and foreign exchange reserves, estimating the government's consolidated net asset position at about 147% of GDP in 2026, liquid assets at roughly 170% of GDP and general government debt at about 26%.

Moody's affirmed the long-term local- and foreign-currency issuer ratings at 'Aa2' with a stable outlook on June 12, 2026, alongside the foreign-currency senior unsecured debt rating at 'Aa2' and the medium-term note programme rating at '(P)Aa2'. High per capita income, economic diversification, strong institutions, effective policymaking and very low federal government debt were cited as strengths. Set against them: elevated regional geopolitical risk, hydrocarbon dependence, and gaps in disclosure and transparency.