Fitch Ratings affirmed the United Arab Emirates' Long-Term Issuer Default Rating at AA- and retained a Stable Outlook. The rating decision reflects a mix of strong fiscal and external positions alongside vulnerabilities tied to governance, geopolitical tensions and the leverage of government-related entities.
According to Fitch, the UAE's credit profile benefits from low consolidated government debt and a very strong net external asset position, together with a high level of GDP per capita. These strengths are, however, offset to some degree by governance indicators that lag peers, elevated geopolitical risk stemming from the Iran war, and material contingent liabilities related to government-related entities.
Fitch anticipates a gradual re-opening of the Strait of Hormuz beginning in July 2026. The agency expects Abu Dhabi's export revenues for 2026 to exceed pre-war forecasts despite ongoing disruption. This outcome is driven by two offsetting factors: higher oil prices averaging $87 per barrel and the diversion of some exports via pipeline to Fujairah, which compensate for reduced volumes transiting the Strait of Hormuz.
Economic projections published by Fitch indicate a notable downturn in 2026. Real GDP is forecast to contract by 4.8% in 2026, with non-oil GDP estimated to shrink by 3.2%. Dubai's economy is singled out for a larger decline, with GDP projected to fall close to 7% in 2026.
On the fiscal side, the consolidated budget is expected to remain in surplus at 4.5% of GDP in 2026, despite a near 20% increase in government spending aimed at mitigating the immediate economic impact of the war. Consolidated government debt is projected to rise to 27% of GDP in 2026 from 24.3% at end-2025, which remains well below the AA category median of 50.3%.
External buffers show strains but remain sizable. Central Bank data cited by Fitch indicate a 9% drop in foreign exchange reserves to $277 billion as of March 2026. The current account balance is projected to fall sharply to 1.3% of GDP in 2026 from 10.6% in 2025. Fitch also estimates overall contingent liabilities from government-related entities at about 63% of 2024 GDP.
Despite these pressures, the rating is supported by Abu Dhabi's very large sovereign net foreign assets, which Fitch places at 164% of UAE GDP in 2025 - among the highest levels for Fitch-rated sovereigns. Fitch states that the Stable Outlook reflects the expected resilience of oil export revenues during the Iran war and the presence of abundant fiscal and external buffers.
Key takeaways
- Fitch affirmed the UAE's Long-Term IDR at AA- with a Stable Outlook, citing low government debt and strong net external assets.
- Fitch projects a 4.8% contraction in real GDP for 2026, with non-oil activity down 3.2% and Dubai's GDP nearly 7% lower.
- Abu Dhabi's sovereign net foreign assets were 164% of UAE GDP in 2025, a major supporting factor for the rating.
Risks and uncertainties
- Geopolitical risk from the Iran war, which affects shipping through the Strait of Hormuz and export volumes - this has implications for energy and trade-related sectors.
- Reduction in foreign exchange reserves and a sharp fall in the current account balance in 2026 could strain the financial sector and external liquidity.
- High contingent liabilities from government-related entities, estimated at about 63% of 2024 GDP, present potential fiscal risks if support is required.